BREAKFAST WITH THE FOOL
Wednesday, November 24, 1999
"The worse the news, the more effort should go into communicating it."
-- Andrew Grove
MetLife: Meet the Public
Richard McCaffery (TMF Gibson)
First Goldman Sachs (NYSE: GS), then United Parcel Service (NYSE: UPS), now MetLife (Proposed ticker: MET).
The country's second-largest life insurance company filed plans with the Securities and Exchange Commission yesterday to become a publicly traded company after 131 years of private ownership.
If the IPO happens quickly, MetLife will be the third company with a long, private heritage to go public in the last year.
The company offers insurance and financial services to a wide range of consumers and institutions. It sells insurance, annuities, and investment products to 9 million households in the U.S., and group insurance, retirement, and other products to 64,000 institutions and corporations, including most of the Fortune 100 companies. The New York company had $27.1 billion in revenue last year and reported $1.3 billion in net income.
MetLife plans to offer 255 million shares, assuming an offering price of $19 per share, which is midway between the stated range of $14 and $24 in its prospectus (SEC filing). This would represent 31% of the company's 831 million outstanding shares. It expects to raise a maximum of $6.5 billion, which would make it the largest IPO in history. UPS currently holds that honor from its recent offering. (Click here for details).
MetLife plans to receive about $4.7 billion from the offering and will use the proceeds to reimburse policy holders, pay down $935 million of short-term debt, and for general corporate purposes.
In large part, the offering is a move by MetLife to position itself to better compete in a financial services world unfettered by the Glass-Steagall Law, legislation passed in 1933 that separated commercial banking, insurance, and financial services firms in an effort to protect investors and the American economy.
Congress recently signed the Financial Services Act of 1999, which effectively scraps Glass-Steagall and replaces it with more modern legislation. (What's it all mean? Click here for a recent Fool story).
With liquid, valuable stock at its disposal, MetLife will be free to pursue mergers and acquisitions as it seeks to provide consumers with a full range of financial and insurance products. The company will have to compete with powerhouse conglomerates such as Citigroup (NYSE: C), the giant insurance and financial services firm formed by the merger of Travelers and Citicorp.
News to Go
The French government has rejected Coca-Cola's $733 million offer to buy Pernod Ricard's Orangina soft drink because of antitrust laws. It's the second time Coke has been rebuffed in its attempt to buy the popular brand.
Industrial, entertainment, and financial services powerhouse General Electric (NYSE: GE) denied it has offered to sell the NBC television network to Time Warner (NYSE: TWX) for about $25 billion. Rupert Murdoch, News Corp.'s (NYSE: NWS) chairman and chief executive, said he knew of such an offer, Bloomberg reported.
Auto manufacturer Ford Motor (NYSE: F) bought Pi Group, a Cambridge, England company that makes software and electronics for high performance cars, Bloomberg reported. Terms were not disclosed. The privately held company will be part of Ford's research and technology division.
Systems integration company Computer Sciences (NYSE: CSC) landed a $65 million-a-year outsourcing deal with defense and electronics firm Raytheon (NYSE: RTNA) to manage many of its mainframe computers and data centers, provide help desk support services, and assist with other IT operations starting in the first quarter of next year. Up to 300 Raytheon employees will be offered jobs at CSC.
Check out why Brian Graney thinks Coke is the real thing... David Gardner explains that the Rule Breaker strategy is much more than Internet stocks... The Fool kicks off its 1999 charity drive. Here's a list of the five organizations our readers selected.