Mead Johnson Nutrition (MJN), the first company to raise money through an initial public offering in three months, saw its shares rise as much as 12% Wednesday in their debut on the New York Stock Exchange.
Mead Johnson, a consumer products company best known for its infant formula brand Enfamil, was spun off from pharmaceutical giant Bristol-Myers (BMY).
Its shares opened at $26, an 8.3% premium to the $24 at which shares were priced in the company’s initial public offering late Tuesday.
The deal generated $720 million for the new publicly traded entity.
Bristol-Myers, which will keep an 85% stake in Mead Johnson, said in a statement that it spun off the unit in an effort to strengthen its capital structure and focus on its biopharma business.
The shares had been expected to price between $21 and $24. Strong demand allowed the company to price at the high end of that range. In addition, the company sold 30 million shares, well above the 25 million it originally planned to sell.
This deal, from an established company with strong brand equity, solid cash flow and which pays a dividend, is the type of deal investors are likely to turn to during difficult market conditions, said Sam Snyder, a research analyst with Renaissance Capital in Greenwich, Ct.
"All those things lower the risk profile of a deal, and all those things entice investors off the sidelines," he said.
Mead Johnson’s IPO, the largest in nearly 10 months, broke a 12-week drought and was the first to launch since on-line university operator Grand Canyon Education (LOPE) went public in November.
The rough market conditions led two smaller deals -- one from vehicle armor maker O'Gara Group, and another from renewable fuel company Changing World Technologies -- to postpone IPOs scheduled to price their shares on Tuesday.
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