NEW YORK - LandCare USA, the first publicly traded landscape maintenance company since the owners of Environmental Industries bought back its stock, debuted on the New York Stock Exchange June 4, 1998, amid a struggling market for initial public offerings.
At the final bell on its opening day, the stock price stood exactly where it opened the day – $8 per share. More than 1.1 million of the 5 million available shares traded throughout the day, with the stock price remaining between $8 and $8 1/8 per share all day.
“This is a very difficult market for IPOs and any new stock names,” recognized Bill Murdy, CEO of the $116-million company, in an exclusive phone interview with Lawn & Landscape. “Small cap stocks haven’t done well of late, but we want to get public and get things moving.”
A survey of IPOs launched during May confirmed Murdy’s assessment of the market, as an article in The Wall Street Journal noted that of the 52 companies to go public last month, “only 19 percent of IPOs were priced above their expected range during May.”
The events leading up to the offering were not necessarily pleasant for the seven companies that will ultimately become LandCare USA. On May 27, The Wall Street Journal ran an article entitled, “LandCare Tests the Waters for ‘Roll-Up’ Firms, but Observers Say Reception May be Chilly.” The article, which failed to include interviews or comments from LandCare USA representatives, went on to criticize the nature of this IPO and its timing.
In addition, the IPO had to be delayed a few days while the stock’s price was still being decided in a struggling marketplace.
“This company is still a great company,” noted Murdy, “and there is a lot of excitement about the consolidation of this market. The key for us is to make sure the stock comes out at a price from which it can grow up.”
Murdy said the events leading up to the stock’s IPO will have no effects on LandCare USA’s plan to continue with its current roll-up strategy.
“The founders are of one mind, and they are ready to move forward,” he explained. “The delay in the offering was a strategy to allow the market to get better, and while we’re a little disappointed in the initial price, there are plenty of IPOs that aren’t even happening right now because of the market.”
David Luse of Arteka, one of the the seven LandCare founders said he couldn't be more pleased with the IPO.
“We’re launched and we’re excited to go to work,” he said. “We’re feeling good and we’re in it for the long haul.”
Of the 13 IPO’s priced and ready to launch on June 4, only seven of them were publicly traded, Luse noted, adding that four of the seven which were launched fell below their initial prices. LandCare's stock price never fell below $8.
LandCare USA now enters a “quiet period” of 25 calendar days mandated by the Securities & Exchange Commission, during which it is prohibited from finalizing any additional acquisitions or mergers.
After that period is over, formal offers can be presented by LandCare, which expects to operate on a regional basis to start.
As LandCare continues to move ahead, it named Judith Guido as its chief marketing and communications officer. Guido most recently worked for Laflamme Services Inc., Bridgeport, Ct.
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