After more than a month-long cooling off period, software firm Salesforce.com Inc has returned to the calendar and is slated to hold its initial public offering next week.
Salesforce, which offers Internet-based software designed to help companies manage customer relations, delayed its highly anticipated IPO on May 13 to allow for a "cooling off" period after the company and its CEO, Marc Benioff, were featured in a New York Times article.
Benioff's participation may have violated securities laws designed to keep a company from disclosing details about itself not contained in its prospectus and to keep it from hyping its stock ahead of its offering. "Hyping is what delays the offer," said Brian Lane, a lawyer and former director of the Division of Corporation Finance at the US Securities and Exchange Commission. "If you hype it, they (the SEC) impose a cooling off period because that's how they counter hype."
Many companies decline all media interviews ahead of their IPO rather than chance violating the "quiet period" that limits communication by company executives ahead of the deal. The International Securities Exchange, which is planning to sell shares in itself to the public in the second half of this year, recently cancelled a dinner it typically holds every year for media in New York.
Salesforce's IPO comes with the caveat that it could have to repurchase the shares if it is sued and found to have violated securities rules by participating in the article. The company plans to "contest vigorously" any claim, but Salesforce may have to repurchase the shares sold in its IPO at the original purchase price for a period of one year if the participation is found to have violated the quiet period.
Salesforce expects to offer 10 million shares between the price of $7.50 and $8.50 per share.
Sal Morreale, who tracks IPOs for Cantor Fitzgerald in Los Angeles, said there has not been much talk about the deal.
"All of the compliance issues that the company had put a little water on the fires," he said of the offering.
But Tom Taulli, co-founder of Current Offerings, said the positive reception of educational software Blackboard Inc's IPO on Friday could bode well for Salesforce.
The company sells hunting, fishing, camping and related outdoor merchandise and describes itself as the nation's largest direct marketer of such merchandise.
"There's a lot of buzz about that stock," Morreale said, adding: "The earnings are beautiful on this stock. They've got over a billion in revenues." The Sidney, Nebraska-based company is expected to offer 6.25 million shares with selling stockholders selling 1.56 million shares. Its estimated price range is $15 to $17 per share, and it has applied to list its shares on the New York Stock Exchange under the symbol "CAB". Also on the calendar for next week is Jackson Hewitt Tax Service Inc, a unit of Cendant Corp. It plans to offer 37.5 million for between $18 and $20 per share.
Cendant, the sole stockholder of Jackson Hewitt, will sell all the shares in the offering, according to regulatory filings. Concurrently with the IPO, Jackson Hewitt will enter into a transitional agreement with Cendant to become an independent company. Goldman Sachs and JP Morgan are lead managers for the sale. And biotech deals continue to enter the week on a difficult note. On Friday, Senomyx Inc cut the price of its offering for the second time in as many days, and Momenta Pharmaceuticals Inc reduced its estimated price range.
That followed CoTherix Inc's decision on Thursday to pull its IPO altogether, citing "adverse market conditions" after a string of biotech IPOs struggled to price their offerings.
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