Kraft Foods, the food arm of US tobacco conglomerate Philip Morris, has thwarted criticism of the high price of its initial public offering to raise US$8.7bn. The move makes it the largest publicly traded food stock in the US, and second in the world behind Swiss giant Nestlé.
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Investor enthusiasm for the IPO shows that confidence in food stocks remains undaunted. Compared with hi-tech or Internet stocks, food companies may not be exciting but investors feel they remain a safe bet.
The IPO leaves Philip Morris with an 84% stake in Kraft Foods, although it retains 97.7% of voting stock and thus almost full control of its future. Analysts are speculating that the IPO may be the forerunner of a full-scale spin-off, but as yet there is no comment from the company.
To read a full, open-access feature on the IPO, please click here.
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