by Kate Kelly
Wall Street Journal
December 14, 2001
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For the first time in five years, investors will be offered the chance to buy shares in a new publicly held defense company.
Shares of United Defense Industries Inc., an Arlington, Va., manufacturer of guns, armored vehicles, and other military equipment, begins trading today on the New York Stock Exchange under the ticker symbol UDI. The offering, which is slated to raise about $400 million, is a partial spinoff from the large private equity firm Carlyle Group. After today's offering, Carlyle will retain a majority of UDI's stock as well as substantial power over the company's board
The company's stock priced Wednesday evening at $19, the midpoint of the intended $18 to $20 price range, UDI plans to use the proceeds of the deal to repay bank debt.
In its offering today, UDI joins the largest group of IPOs to come public in a week since last October, suggesting that investors may be warming up to the new-issue market again. By late yesterday, the day's three IPOs, Prudential Financial Inc., Nassda Corp., and Centene Corp., had all managed considerable gains.
That a company like UDI would elect to go public this fall isn't surprising, given the events of Sept. 11 and the subsequent fighting in Afghanistan. Carlyle, which tends to hold acquisitions like UDI for three to five years, had considered a range of options, from selling the company outright to undertaking the IPO, said Allan Holt, a Carlyle partner who focuses on defense an aerospace investments. "The decision was made in the fall to go out, because you go out when the market's the best, and the market's good right now for defense companies," said Mr. Holt.