Milacron offers IPO; dull trading on first day

US machine maker Milacron Holdings has announced the pricing of its initial public offering of 14.3 million shares of its common stock at a price to the public of US$20.00 per share to raise US$286 million. All of the shares of common stock in the offering are being offered by Milacron. In addition, Milacron has granted the underwriters a 30-day option to purchase up to an additional 2.1 million shares of common stock. BofA Merrill Lynch, Barclays, J.P. Morgan, Baird, Credit Suisse and Goldman, Sachs & Co. are acting as joint book-running managers and KeyBanc Capital Markets and William Blair are acting as co-managers. The offering is expected to close on 30 June, subject to customary closing conditions.

The Cincinnati-based company is owned by private equity firm CCMP Capital Advisors that will continue to own about 62% of the common stock after the IPO.

Meanwhile, Milacron's shares that started trading on the New York Stock Exchange at an initial price of US$20 a share, closed at US$19.58, down 42 cents or 2.1% down.

According to some reports, early reviews of Milacron's shares before the markets opened did not paint a pretty picture. Analyst Don Dion suggested that the retail investor should consider other IPOs, bluntly stating that the moulding machinery maker's IPO was "not well formed." Meanwhile, a blogger for Renaissance Capital, a global pre-IPO investment adviser for institutional investors, said the IPO is a leveraged buyout for Milacron to pay down debt, which Milacron has also stated in the IPO prospectus it filed with the Securities and Exchange Commission.

In fact, since Milacron exited bankruptcy in 2009, it has made major acquisitions to become the largest manufacturer of plastic processing equipment in the US. It has since 2012 acquired three companies, developed new products, expanded its production capabilities and implemented a back-office and engineering shared services centre in India.

This makes it a highly leveraged company and it did issue a major dividend to existing stockholders recently, but its margin expansion strategy and dominant market position could attract investors who believe in the management's ability to execute, said the Renaissance blogger.

Milacron is a global leader in the manufacture, distribution and service of highly engineered and customized systems within the plastic technology and processing industry and it says it is only global company with a full-line product portfolio that includes hot runner systems, injection moulding, blow moulding and extrusion.

Recently, the company announced plans to expand its Southwest Ohio plants, adding about 300 jobs, and is also moving its headquarters from Oakley to Blue Ash.


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