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Infineon IPO to raise $5.9bn

Biggest German float since Deutsche Telekom in 1996, apparently

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Infineon, Siemens' spun-off semiconductor operation, will IPO on 13 March -- a share issue the company believes will raise between five and six billion euros ($4.94-5.93 billion) -- the company said today. The IPO will take place on both the Frankfurt and Nasdaq stock exchanges, with shares hitting the market between 29 and 35 euros, the exact price to be announced 12 March, just before the float. Infineon's IPO has been on the cards since last July when CEO Ulrich Schumacher mooted the possibility and finance director Peter Fischl hinted at an October 1999 launch date. Back then, the idea of an Infineon IPO seemed laughable -- as a Siemens business unit it was well known for its inability to make money. As part of Siemens, Infineon lost 1.2 billion marks ($606 million) in 1998. Not long after the IPO 'announcement' -- the two were sufficiently close for Schumacher to have know the results when he said what he said -- Infineon posted its first profit: $22.75 million on sales of $1.25 billion for what was effectively its third quarter of fiscal 1999. Immediately after the results were posted, the IPO date was switched to February/March 2000. Last month, Infineon posted a Q1 2000 profit of 117 million euros ($11.58 million). As one of the world's leading memory producers -- the Seven Dramurai™ -- it's likely to continue doing very nicely thank you, as new Internet, mobile and digital content markets open up, all of them requiring RAM chips. The IPO will seen 26 per cent of Infineon being floated. Siemens will retain the rest, but Schumacher said that the German industrial giant plans to divest itself of most of that 74 per cent share by next year. Whether that means there will be a second share issue next autumn isn't known, but that certainly what the German edition of the FT has predicted. However, according to analysts cited by Reuters, Siemens still holds all of the key patents on which Infineon's products are based and these will have to be transferred to Infineon if Siemens' plan to keep just a minority stake in the company is to make financial sense. The snag is that the transfer process is legally complex and could easily take a year to complete. Schumacher reiterated earlier statements that Infineon will use the IPO proceeds to fund acquisitions, both at home and abroad. No names were named, but the he did say the company was interested in "small firms with know-how". ®

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