Orange IPO falls flat in Paris

The share price closed yesterday at Euro 9.4, leaving Orange capitalised at Euro 45.2bn (Pounds 28.92bn) – less than a third of the value analysts believe it could have been worth had it floated soon after France Telecom bought it from Vodafone.

‘Orange was a damp squip. It was very disappointing,’ one analyst told this morning’s Financial Times.

In London, where full listing will occur on Friday, shares did not fare well either, closing at 603.5p on a ‘when issued’ (unofficial trading) basis.

Orange’s poor showing yetserday put a negative spin on the entire European telecoms market. Shares in parent company France Telecom fell 6.3%, while BT, Vodafone and Telecom Italia Mobile closed 4% lower, and Deutsche Telekom and KPN were 3% down.

France Telecom, issued 633 million Orange shares at Euro 10.00 for institutions towards the bottom of the expected price range. Retail investors were given a discount and could begin buying shares at Euro 9.5. The company still has the option to issue 95 million more shares.

The offering will raise Euro 7.2bn, below the Euro 7.9bn France Telecom was expecting. It will leave the company well short of the Euro 14bn in needs to buy back shares from Vodafone, a measure agreed upon in the Orange takeover deal last year.

Orange’s initial public offering has been a rocky one. Beginning with several postponements, France Telecom was then forced to lower its expected prices from between Euros 11.5 and 13.5 per share to a range from Euro 9.5 to11.0 last week.

Some expected the French telecoms giant to pull its IPO, but market watchers said this would have been a public relations disaster.


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