By
NEW YORK (Dow Jones) - Changyou.com Ltd. priced at the top of
its estimated price range for its U.S. stock market debut on
Thursday as the gaming spinoff from Sohu.com drew strong support as
the first initial public offering since February.
Changyou.com (CYOU) is going public at $16 a share, the top end
of its estimated range of $14-$16 a share. With 7.5 million
American depositary shares in the IPO, the company raised $120
million .
The strong pricing comes after firms that buy initial public
offerings heralded heavy demand for the unit of Sohu.com
(SOHU).
"It is multiple times oversubscribed to a very strong
institutional and retail book," said Scott Sweet, senior managing
partner at advisory firm IPOBoutique.com.
The Changyou offering marks the first U.S. IPO since infant
formula maker Mead Johnson Nutrition Co. (MJN) raised $828 million
in a spin-off from parent Bristol-Myers Squibb Co. (BMY) on Feb. 11
at $24 a share. The stock closed at $27.88 on Wednesday despite
tough conditions in the stock market.
The Mead Johnson IPO sparked hopes that the long dormant initial
offering market was coming back to life. But those hopes quickly
sputtered out.
Despite plans by other firms to list shares, Mead Johnson's was
the only U.S. IPO for the first quarter.
Analysts at IPO research firm Renaissance Capital said Changyou
may lure investors who like its revenue growth and high
margins.
"It remains to be seen whether investors will be turned off by
its reliance on a single game, but with the deal being pitched at
6.5 times earnings, the price may be enticing enough to outweigh
the risks," they said in a report.
Changyou.com reported net income of $108 million on revenue of
$202 million in 2008, compared to net income of $5.3 million on
revenue of $42 million in 2007.
Credit Suisse Group (CS) and Bank of America Corp.'s (BAC)
Merrill Lynch unit served as underwriters for the Changyou.com
IPO.