Nielsen and Demand strong out of the gate

Nielsen shares are up 9% while Demand is soaring at nearly 40%

Moments after debuting on the stock market, TV-ratings company Nielsen and new media publisher Demand Media are out of the gate and running.  After pricing its shares at $17 each—raising them from their original price of $14-$16—Demand Media is soaring 38% to more than $23 a share. 

Similarly, after pricing its shares at $23 each, Nielsen is going strong as its shares rise 9% to approximately $25.  At $23 a share plus a $240 million bond offering after payment of commissions and expenses, Nielsen’s IPO was expected to raise $1.8 billion. 

Founded in 1923, the company sold for $9.7 billion in 2006 to a group of private equity firms that include the Carlyle Group, the Blackstone Group, Kohlberg Kravis Roberts Nielsen, and Thomas H. Lee Partners. Due in part to the sale, the company has some $8.6 billion worth of debt, which the proceeds from the public offering are expected to ease slightly.  Meanwhile, the private equity firms that invested in Nielsen will take a $7 million dividend before the IPO closes.

Some analysts had predicted that public investors would be leery about the company’s debt, which would ultimately dampen demand, but so far so good. 

Last week, Nielsen announced its preliminary 2010 earnings, and revenues for the year are expected to be somewhat anemic, but up, nevertheless.  The company claims that revenues should be in the $5.11-$5.13 billion range, up 6.3-6.7% from 2009.

Other than GM’s $15.7 billion offering, no other IPO last year breached the $1 billion mark.

Analysts believe that the current IPO market is strong and the public debuts of Nielsen and Demand Media will prompt other more reticent companies to get in on the action.  Toys R Us, for example, made its plans for a public offering known last spring, but ultimately folded to wait for a stronger market. 

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