MetLife's pared-back IPO raises $2.88 billion

Fund managers think shares could attract buying today

Insurance

April 05, 2000|By BLOOMBERG NEWS

NEW YORK -- MetLife Inc. raised $2.88 billion yesterday in the largest U.S. stock sale so far this year, ending 85 years of ownership by its policyholders and giving the nation's biggest life insurer shares to make acquisitions and pay employees.

The offering, which was halved in March when life insurance stocks were plunging, helped MetLife raise a total of $4.6 billion, including a sale of shares to underwriters and a bond offering.

The company that uses Snoopy and other Peanuts cartoon characters to advertise its life and health insurance policies sold 202 million shares at $14.25 each, at the middle of its selling range of $13 to $15 a share.

MetLife shares could be buoyed on their first day of trading today as investors who couldn't buy stock in the IPO try to purchase shares in the open market, fund managers said.

"I think there will be interest in the aftermarket," said Tom Goggins, co-portfolio manager of the John Hancock Financial Industries fund. "It was a great time to do it."

MetLife, which has 11 million policyholders, went public on a volatile day for the stock market. The day after plunging 7.6 percent, the Nasdaq composite index recorded its biggest-ever plunge before recovering much of it by the 4 p.m. close, ending down 74.79, or 1.77 percent.

The two days of declines, which were led by computer-related and telecommunications stocks, may have stoked demand for MetLife's IPO among investors looking for more stable investments.

"It's a relatively safe name in a volatile market," said Kenneth G. McQuade, an insurance analyst at Waddell & Reed Inc., which manages about $40 billion.

The MetLife offering was less than half the size of what the insurer envisioned in November, when it said it would raise as much as $6.5 billion in the sale.

Falling insurance stocks -- Standard & Poor's index of life insurers fell 27 percent in 1999 -- forced the company to slash the offering's size last month and seek money in a private placement and a bond sale.

Banco Santander Central Hispano SA and Credit Suisse Group, parents of two of the underwriters, will buy a total of 60 million MetLife shares, with each paying $428 million for 4 percent stakes in the insurer. That's less than the 4.9 percent stakes they offered to buy in March.

MetLife said it will raise another $875 million through a convertible bond, less than the $1 billion it was planning last month.

The New York insurer needs the money to pay policyholders as part of its conversion to a public company. It originally expected to raise as much as $6.5 billion in the offering.

The company plans to hand out about 493.9 million shares to policyholders who choose to receive MetLife stock in exchange for their ownership of the company. The rest will be given cash or enhancements to their policies.

MetLife, which has been in business for 132 years, is joining a handful of its rivals by abandoning mutual ownership and issuing stock. The companies hope to stave off growing competition in the industry by using shares to pay for acquisitions and compensate employees.

The recent rally in insurers' shares has boosted stock of MetLife competitors that went public in recent months.

Last week, John Hancock Financial Services Inc., which began trading for the first time Jan. 27, rose above its IPO price of $17 after trading below that mark since mid-February. Its shares closed down 12.5 cents at $17.875 on the New York Stock Exchange yesterday.

Sun Life Financial Services of Canada Inc., Canada's second-largest life insurer, sold shares March 22 in the midst of the rally, and is up 23 percent from its initial public offering price of C$12.50. It fell C$0.60 to C$14.80 in Toronto trading.

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