Kraft IPO could raise $8.7B
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May 2, 2001: 6:09 p.m. ET
Philip Morris unit files to sell 280M shares at $26-to-$31 each, could raise $8.7B
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NEW YORK (CNNfn) - Kraft Foods Inc. set the terms Wednesday of its proposed initial public offering which could now raise as much as $8.7 billion.
Kraft Foods filed with the Securities and Exchange Commission to sell 280 million shares at $26-to-$31 each via lead underwriters Credit Suisse First Boston and Salomon Smith Barney.
Parent firm Philip Morris Cos. expects to launch the IPO by the end of the second quarter, the company said in a statement. The offering is on track to open by mid-June, underwriters on the deal said.
Underwriters on the deal were granted a green shoe, or an over allotment option, to buy an additional 28 million shares.
At the high end, the $8.7 billion IPO would easily be the largest U.S. based IPO since the $10.6 billion offering from AT&T Wireless (AWE: down $0.37 to $20.00, Research, Estimates) last year. The Kraft issue also easily outdistances the $3.6 billion IPO from Agere Systems Inc. earlier this year.
In March, Kraft initially filed to raise as much as $5 billion. Kraft, whose products include Oscar Mayer hot dogs and JELL-O, had at that time yet to specify the number of shares it would offer and their price range.
Parent Philip Morris bought Nabisco Holdings Corp., the maker of Oreo cookies and Ritz crackers, for $14.9 billion last June. Philip Morris was expected to sell a minority stake in Kraft, about 15-to-20 percent. After the IPO, Philip Morris will own 49.5 percent of common stock and 100 percent of Class B stock. Philip Morris (MO: down $1.09 to $51.01, Research, Estimates) will also hold 97.7 percent of combined voting power.
Northfield, lll.-based Kraft plans to use part of the proceeds to pay off an $11 billion note to Philip Morris.
Kraft, which employs about 117,000 people, is the largest U.S. branded food and beverage company in the U.S. Kraft had $34.7 billion pro forma operating revenues on $4.6 billion operating income in fiscal 2000.
Kraft plans to trade under the New York Stock Exchange symbol "KFT."
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