The Leonardo group renounces listing the American subsidiary Drs. This is why and the negative consequences for the group's title in Piazza Affari.
Thud on the stock market this morning for the Leonardo stock after the renunciation of the listing of the American subsidiary Leonardo Drs. The stock, at the start, failed to make a price with a theoretical fall of about 10% and closed the session at minus 6.67%.
Here are all the details.
POSTPONED LISTING OF LEONARDO DRS
Leonardo has decided to postpone Leonardo's IPO Drs. “Despite the interest of investors during the roadshow, within the defined price range, the adverse market conditions did not allow an adequate evaluation of Drs”, explains the group active in aerospace and defense.
Leonardo "announces that the US subsidiary Leonardo US Holding has postponed the initial public offering of shares in Leonardo DRS, Leonardo's indirect subsidiary", announces a note.
IPO EXPECTED BY THE END OF MARCH
The IPO was expected by the end of March and in these days the roadshow was held with potential investors from which it would have emerged a full willingness to subscribe to the entire offer but at a discount in excess of that expected under normal conditions of market.
WEIGHING THE ADVERSE MARKET CONDITIONS
At this stage, the American market is weighed down by both the setback of the technological stocks on the Nasdaq and, more specifically for the companies in the sector, the fears of a possible reduction in the US defense budget.
"Despite the interest of investors during the roadshow, within the defined price range, the adverse market conditions did not allow an adequate evaluation of Drs", explains Leonardo, indicating that "Drs continues to be a fundamental part of Leonardo's business portfolio and an IPO will be re-evaluated when market conditions are favorable and it will be possible to obtain a successful IPO with an appropriate evaluation of this strategic business ". Leonardo “continues to fully believe in Drs' perspectives and to support its development within the group”.
THE COMMENT OF THE ANALYSTS
In any case, the Equita analysts underline, this is “negative news that does not allow us to benefit from the potential higher valuation of Drs obtainable as an independent entity and to strengthen Leonardo's financial structure”. Hence the broker's decision to return to the valuation of 8.8 euros per share, reducing by 6% the target price of 9.4 euros "that we had recently raised, assuming the valuation of Drs at the mid-point of the fork proposed for the IPO and applying a holding discount of 5% ".
THE STRATEGY OF THE FORMER FINMECCANICA
Leonardo was supposed to receive all proceeds from the offer (approximately $ 807.1 million), while Drs intended to keep future profits for growth.
From the moment of the announcement of the IPO it had emerged that Leonardo was not only aiming to raise cash – using the resources that would come with the placement for a debt reduction – but to invest in growth and development: even on these bases the opportunity to postpone the offering of shares on the market.
THE DETAILS ON THE PLACEMENT
The offer provided for the placement of a minority stake, 22% of the capital to eventually rise to 25.3% in the event of total exercise of the greenshoe, with a price range between 20 and 22 dollars per share.
THE INSIGHTS OF START IN THE LAST DAYS ON DRS:
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/perche-lex-finmeccanica-rottama-la-quotazione-dellamericana-leonardo-drs/ on Wed, 24 Mar 2021 09:11:23 +0000.