Capital Markets

Fragile IPO Market Takes Another Hit

UK-based Osmetch Plc says it is ending its plans for an offering in the U.S.
Stephen TaubDecember 4, 2008

The already paper-thin IPO market got more bad news, as UK-based Osmetech Plc said in a regulatory filing that it had cancelled its plans to list its shares in the U.S.

The maker of molecular diagnostic platforms had initially had filed with the Securities and Exchange Commission back in September for an initial public offering of 5.5 million American depositary shares. It had hoped to raise $44 million from the offering.

Osmetech’s shares currently trade on the London Stock Exchange’s AIM Market.

According to Reuters, Osmetech is the 89th company to withdraw a U.S. IPO this year.

On Nov. 20, Grand Canyon Education Inc. broke what had been an IPO drought when it priced 10.5 million shares at $12 per share, and began trading on the Nasdaq Global Market. The listing was the first IPO in the U.S. since Aug. 8, when Rackspace Hosting Inc. announced its offering, according to investment bank Renaissance Capital, which maintains the IPO Home website. The Rackspace deal “broke the longest IPO drought since the 1970s,” the website reported.

Grand Canyon’s investors are certainly satisfied. The shares now trade at $16, 33 percent above their IPO price.

In other deals falling through, meanwhile, business software maker i2 Technologies Inc. announced that it has terminated its merger agreement with JDA Software Group.

Reuters noted that JDA had offered to buy i2 for about $346 million in August. In early November, I2’s board declined JDA’s offer to cut the per-share price to below the offering price of $14.86. In a statement, i2 said that it expects to receive a non-refundable termination fee of $20 million from JDA within three business days. Still, i2 shares fell more than 31 percent on the day.