No sweat for local firm on Wall St.

Under Armour's IPO debut soars 95% in one day


Under Armour Inc., the Baltimore company that made sweat-resistant sportswear hip, went public yesterday with the hottest initial stock offering for an American company in five years.

Its shares closed at $25.30 yesterday, up $12.30, or 95 percent higher than the $13 a share that lead underwriter Goldman Sachs & Co. had priced it at the day before. The gain was the largest by percent on the Nasdaq stock market yesterday with nearly 18 million shares traded.

"Under Armour has created a world-class brand in a very short period of time," said Michael Moe, chief executive officer of ThinkEquity Partners Inc., a research and investment banking firm. "The investors see a sustainable advantage. It's not just a hot product that becomes sort of a Roman candle."

At 11 yesterday morning, when the new shares hit the market about 90 minutes after Wall Street opened, clapping, whistling and boisterous cheering wafted from Under Armour's headquarters inside the renovated Tide Point warehouse in South Baltimore. Televisions normally tuned to sports channels broadcast a financial cable network instead.

It was the second-best debut for an IPO this year after the Chinese search engine, which more than quadrupled its first day in August. It was the headiest stock initiation for an American company since technology company Transmeta Corp. entered the market five years ago with a 115 percent first-day gain in November 2000, according to Thomson Financial.

Under Armour's market capitalization became $789 million. Kevin A. Plank, a former University of Maryland football player who created the company on his idea for an undershirt that didn't retain sweat, saw his net worth instantly soar to nearly $400 million in stocks and cash.

While Under Armour got a warm welcome on the market, the company didn't make all that money from the run-up in the stock. The underwriter sets the IPO price in consultation with the company before the debut. So Under Armour got $13 a share, not the price that investors paid the next day, which started off at $31 before falling to $25.30.

A bigger market cap for Under Armour, however, does have its advantages. For example, the company could issue fewer of the higher-priced shares to buy other companies.

Proceeds from the stock sale will be used to repay debt, redeem preferred stock held by investor Rosewood Capital and, possibly, to finance acquisitions, although none is planned, the company said in documents it filed with the Securities and Exchange Commission. Plank is maintaining autonomy with virtually exclusive ownership of a set of Class B shares. Under Armour was selling 9.5 million of the shares, while stockholders of the company were selling 2.6 million more.

Although IPOs many times doubled in price during the late 1990s technology boom, the average "pop" of a new public company this year was 10 percent, according to Renaissance Capital, a Connecticut research and investment firm.

"In the heyday of the era, it was routine, but it's not so routine these days," said Jeff Stacey, managing director of, an online service that tracks the market. "There may have been a handful that have done it, but not a lot. This is considered a big success for the company."

An executive with Under Armour declined to speak with a reporter yesterday, noting a quiet period required by federal regulators. But that hasn't stopped others from talking about the company. Phones were ringing at brokerages around town and elsewhere with calls from interested investors.

Legg Mason Inc. broker Gary T. Padussis said he fielded about 80 calls yesterday, from small investors to multimillion-dollar account holders, interested in Under Armour. His office in Towson got 500 phone calls on Under Armour, he estimated.

"There was a lot of interest nationally in this stock but especially locally because he's a local boy from Bethesda," Padussis said of Plank. "People like that he started the company here in Maryland."

The company has gained heroic stature in the local business community, which has watched financial services headquarters move away and its long-ago industrial giants wither.

Under Armour typifies the very "new economy" transformation of the Tide Point office complex where it is based. The former Procter & Gamble soap complex has become a haven for startups and trendy professional offices. Red brick buildings line the waterfront, sandwiched between Domino Sugar and a molasses tank farm, both of which perfume the air on breezy days. Some employees at the complex, with views of the Inner Harbor, prefer zipping along on Segways to walking.

Under Armour enters the public market as some companies have returned to being private entities because of stricter regulatory requirements created by the Sarbanes-Oxley corporate governance law. Under Armour will also face more scrutiny as a public company trying to keep shareholders happy.

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