Turkey’s Coca-Cola Co puts off IPO, spreading caution in market

ISTANBUL (Reuters) – Coca-Cola Co’s Turkish unit postponed an initial public offering worth around $300 million due to insufficient demand, in a move yesterday that analysts said would fuel caution about other planned share sales. Coca-Cola Icecek AS had previously postponed in June what was set to be one of Turkey’s largest IPOs in recent years, saying it would await more suitable market conditions for the sale of about one-third of the company. The latest postponement sparked sharp declines in the Istanbul shares of companies belonging to the Anadolu Group, which has a total 40 percent stake in the Coca-Cola unit. The company said it believed the price was right but the timing was wrong, with the volume of bids insufficient to ensure price stability on the stock market. It decided to postpone the offering, in particular to protect small investors. «We think the price was right, otherwise we would not have collected $260 million worth of bids,» Muhtar Kent, a Coca-Cola Icecek board member, told a news conference. The offering would have gone ahead if demand had been twice as high, but it was not clear when the IPO would now go ahead, Kent said. The company, which collected bids between Nov. 3-5, had offered 75.48 billion shares or 30.8 percent of its capital and planned to sell a further 6.24 billion shares if there was sufficient demand. The shares were to be priced in a range of 4,800 to 5,650 lira. If the maximum amount had been sold, it was to raise between 392 trillion and 462 trillion lira ($264-$311 million). Strategist Hakan Avci from Raymond James said he did not believe the Coca-Cola decision had any specific link with investor views of Turkey, noting that the stock market reached record highs last week. «But it will have implications for privatizations and similar large IPOs, as people will be less sure about the demand that they can collect and valuations will have to be carefully considered,» Avci said. Turkish Airlines (THY), the national carrier, is planning to offer as much as 23 percent of its stock as part of its privatization scheduled to be held before the end of 2004. State petrochemicals company Petkim is planning a public offering of a 20 percent stake in February and a senior official from the company has said it would monitor the Coca-Cola and THY sales. The Coca-Cola move was a major reason behind a 2.6 percent fall in the main Istanbul share index by late afternoon, but traders said some people were using it as an excuse to cash in on record-high stock prices. Among Anadolu Group shares, leading Turkish brewer Anadolu Efes fell as much as 9 percent to 20,400 lira. Later it recouped losses to trade at 22,300. Anadolu Efes has a 33.33 percent stake in Coca-Cola Icecek. Coca-Cola Icecek, which handles all of the US firm’s operations in Turkey, first applied to Turkey’s Capital Markets Board (SPK) in May for permission to hold its IPO. An official said the SPK had approved the postponement.