United Parcel Service’s initial public offering of stock Wednesday set a record, and analysts say the company is an “instant blue chip” on Wall Street.
The offering of 109.4 million shares, about 10% of the world’s largest package carrier, was the biggest domestic IPO to date at $5.47 billion, easily beating the record of $4.4 billion when Conoco went public a year ago. According to published reports, there was 10 times the demand for the IPO than there were shares available.
In its first hour of trading on the New York Stock Exchange, stock prices rose $18 from the initial offering price of $50 per share. The offering was eagerly anticipated, prompting UPS Friday to raise its expected IPO price range from $36 to $42 per share to $47 to $49, which later was bumped up to $50.
The Atlanta-based company plans to use the proceeds to buy back some of the Class A voting stock owned by UPS employees and various trusts set up by the company’s founders and heirs. These 10-vote Class A shares will make up about 90% of its stock and 99 percent of its voting power. (The Class B shares offered publicly are one vote each.) This will allow the company to raise money to help it compete with FedEx, expedited trucking services, the post office and the less-than-truckload industry without surrendering control.
UPS has a promising future in e-commerce deliveries, which no doubt lured many investors in today’s dot-com-happy market. UPS is seen as one of about 50 companies in the world with answers to problems shipping goods bought via the Internet. But analysts say the 92-year-old company’s financial performance over the long haul is even more attractive.
Photo: A portion of a UPS 727 jet fuselage joins a display of UPS delivery vehicles, including the familiar chocolate-brown trucks, at the entrance to the New York Stock Exchange during the celebration of the company’s IPO.