Investors Lap Up Mead Johnson IPO

Feb.12.09 | About: Mead Johnson (MJN)

Mead Johnson's (NYSE:MJN) IPO yesterday received a warm welcome from investors, who drove the shares up as much as 13% in their first day of trading. The infant formula maker's shares closed at $26.43, up about 10% from their pricing of $24 and 1.7% from the open.

All quotes below are from the company's latest S-1 filing, linked below.

Business Overview (from prospectus)

We are a global leader in pediatric nutrition with approximately $2.6 billion in net sales for the year ended December 31, 2007. We are committed to creating trusted nutritional brands and products which help improve the health and development of infants and children around the world and provide them with the best start in life. Our Enfa family of brands, including Enfamil® infant formula, is the world’s leading brand franchise in pediatric nutrition, based on retail sales. Our comprehensive product portfolio addresses a broad range of nutritional needs for infants, children and expectant and nursing mothers. We have 100 years of innovation experience, during which we have developed or improved many breakthrough or industry-defining products across each of our product categories. Our singular focus on pediatric nutrition and our implementation of a business model that integrates nutritional science with health care and consumer marketing expertise differentiate us from many of our competitors.

Offering: 30.0 million shares at $24 per share. Net proceeds of approximately $720 million will be used to repay in full the foreign intercompany notes and to satisfy other obligations owed to BMS that would have otherwise been forgiven or reduced in full.

Lead Underwriters: Citi, Morgan Stanley, Banc of America

Financial Highlights:

Net sales for the nine months ended September 30, 2008 increased $267.5 million, or 14.0%, including a positive 4.2% foreign currency exchange impact, to $2,174.7 million compared to the nine months ended September 30, 2007...For the nine months ended September 30, 2008, our gross sales increased $210.0 million, or 7.5%, to $2,997.8 million compared to the nine months ended September 30, 2007. Gross-to-net sales adjustments during the same period declined $57.5 million, or 6.5%, to $823.1 million... For the nine months ended September 30, 2008, costs of products sold increased $118.2 million, or 17.0%, to $812.0 million compared to the nine months ended September 30, 2007. This increase was driven primarily by global dairy price increases... For the nine months ended September 30, 2008, North America/Europe earnings from operations before minority interest and income taxes was relatively flat and decreased $3.2 million, or 0.9%, to $357.6 million compared to the nine months ended September 30, 2007... for the nine months ended September 30, 2008, net earnings increased $27.5 million, or 8.6%, to $347.5 million compared to the nine months ended September 30, 2007.

Competitors:

We compete in two primary categories, infant formula and children’s nutrition. The competitive landscape in each category is similar around the world, as the majority of the large global players are active in these categories. Our main global competitors for sales of infant formula and children’s nutrition products are Nestlé S.A. (OTCPK:NSRGY), Abbott Laboratories (NYSE:ABT), Groupe Danone (OTC:GDNNY) and Wyeth (WYE). Wyeth does not compete with us in the United States.

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