Mead Johnson Nutrition IPOs Today

Originally written on 2/6/09.

I remember reading this last year and this morning I read it from Yahoo Finance. Here is the prospectus at the SEC, and here is a glimpse at IPOHome. It looks like Mead Johnson (MJN) are going to IPO on Feb 10. (from the roadshow, again from IPOHome).

I think most people have heard of their main product, Enfamil (Amazon, Wiki), the infant formula, whether they have kids or not. For instance, I don’t have kids now, but I bought some Enfamil for my friends back in China last year.

At first glance, this is a good IPO. If they trade around the $21 to $24 range (the IPO price range), I may get some. In this recessionary environment, I think most parents still feed their infants with the best formula (if possible). This is especially true back in China.

Mead Johnson was a division of Bristol Myers Squibb (BMY) before this IPO. Here's some background about this spinoff from the deal. The company plans to pay 20 cents as a quarterly dividend. Like the EMC/VMWare (VMW) spinoff, the parent company is only selling a minority stake (12.5% according to Reuters). I think this, combined with current market conditions, is the reason why this IPO has not received much attention.

Snapshot: offering 25 million shares, ranging from $21 to $24, expected Feb. 10. Dividend (proposed): 80 cents per year.

Comments

[Marcap:]

Unfortunately many IPO investments are nothing more than a crap-shoot. In most cases, we have only an Advertising Prospectus, coupled with both Company and Broker hype behind it, on which to base our potential investment decisions. As a result, in the frenzy created to buy in at the bottom, quite often the stock is quickly elevated to an unrealistic level, only to quickly fall as soon as the initial hype wears off. Google should be a prime example of this. Its shares quickly reached an unsupported $700+ level, but then just as quickly were brought back to $300 after reality was realized, likely never to see the $700 level again.

Mar 02 08:56 AM