UPDATE: Hyatt Hotels, Ancestry.com Climb Post-IPO
(Updates with new first two paragraphs, includes Ancestry.com performance.)
By Lynn Cowan
Of DOW JONES NEWSWIRES
Hyatt Hotels Corp.'s (H) IPO proved Thursday what every hotel operator knows:
Even when the industry is full of vacancy signs, people will line up for a
bargain rate.
Despite its presence in a sector that is in the middle of an occupancy and
rate slump, Hyatt's stock priced within its expected range and shot higher in
its first hour. Traders cited the IPO's successful debut as a positive catalyst
for the overall U.S. markets Thursday.
The deal's early performance provided welcome relief during a rocky period for
new U.S. stocks, and was reinforced by a 19% opening pop in a second IPO that
launched Thursday, genealogy Web site Ancestry.com Inc. (ACOM).
In the last seven days, two IPOs that were expected to debut in the U.S.--
energy company AEI and bank PlainsCapital Corp.--were pulled due to market
conditions, and several offerings in recent weeks have priced poorly and traded
down on their first days. Recent broad market volatility has made pricing more
difficult for IPOs due to investor jitters.
Hyatt's stock opened at $27 a share on the New York Stock Exchange, up 8% from
its initial public offering price of $25; it was trading recently at $27.32. All
38 million shares in the offering were sold by the founder's descendants, the
Pritzker family, at a price within its expected range of $23 to $26 a share.
Goldman Sachs Group Inc. (GS) managed the deal.
The hotel chain, the 10th-largest in the world based on number of rooms, was
plagued with investor uncertainty about its offering in recent weeks, but
analysts were in agreement that the company's price range represented a bargain.
Morningstar Inc. (MORN) analysts valued the shares at $25, while IPOdesktop.com
President Francis Gaskins said the company priced its shares below the company's
book value of $29.
Among the positives for Hyatt are its strong brand name, a low-debt balance
sheet, and a healthy stash of cash compared to its rivals. Although its room
revenue has been in a decline and it has posted a loss so far in 2009, optimists
could argue that if investors want to buy a hotel chain at this low point in the
industry's cycle, Hyatt is the one to own.
A strong balance sheet "gives them dry powder to strengthen their position
strategically. They can be acquirers at time when there are not a lot of buyers
out there," said Todd Jordan, a managing director and analyst at Research Edge
LLC in New Haven, Conn.
At Ancestry.com, shares opened at $16.10 on the Nasdaq, up from its initial
public offering price of $13.50; shares were changing hands recently at $15.15,
up 12%. A total of 7.4 million shares were sold at the midpoint of its expected
$12.50 to $14.50 price range, which was set by underwriters Morgan Stanley (MS)
and Bank of America Corp.'s (BAC) Bank of America Merrill Lynch unit.
Two more IPOs are expected to trade in the U.S. this week. Solar panel
component maker STR Holdings Inc. is scheduled to trade under the symbol STRI,
while Chinese printing equipment supplier Duoyuan Printing Inc. will trade as
DYP; both are listing on the NYSE.
-By Lynn Cowan, Dow Jones Newswires; 301-270-0323; lynn.cowan@dowjones.com
(Geoffrey Rogow contributed to this report.)
(END) Dow Jones Newswires
11-05-091145ET
Copyright (c) 2009 Dow Jones & Company, Inc.
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