Infineon Technologies AG may have to price its shares at least 10 percent below Monday's close to convince investors to buy the stock in this week's share sale, a Bloomberg News survey of nine German fund managers shows.
Europe's No. 2 chipmaker may have to sell the 60 million shares for 23 euros (US$19.78) apiece, raising 1.38 billion euros (US$1.18 billion), according to the survey. When it announced the sale July 2 this year, Infineon said it hoped to raise 1.7 billion euros.
CEO Ulrich Schumacher has said he will use the proceeds from the secondary share sale to finance chip production, cut debt and possibly for purchases. Schumacher said he'd rather increase the company's equity than take on new debt.
"They need the money," said Christoph Bruns, the head of stock-fund management at Union Investment GmbH in Frankfurt, which manages DM120 billion (US$52 billion). "If it comes at 22.50 [euros], it'll go," he said, referring to the price.
Money managers' estimates ranged from as low as 18 euros to as high as 25 euros. The fund managers surveyed help manage a combined 100 billion euros. Infineon reiterated it plans to go ahead with the share sale, though "not at any price." Infineon shares fell 6.4 percent to 24.30 euros, the lowest level since a public offering March last year. Sold at 35 euros, the stock peaked at 93.50 euros in June last year.
"There's no way I would buy the shares for more than 20 euros," said Heiko Breiholz, who helps manage US$500 million for Hanseatische Investment GmbH, which is based in Hamburg. Breiholz said he'd buy the shares for between 18 euros and 20 euros.
Infineon's stock has lost 40 percent since the beginning of June this year as computer-memory chip prices dropped. The company forecast a third-quarter loss before interest and tax of as much as 600 million euros June 20 and said it may lose money in the fourth quarter, too. It will publish results July 23, it said today.
"There is no light at the end of the tunnel at the moment, which means there is no fundamental support for this share sale," said Trudbert Merkel, who manages about DM13 billion (US$5.7 billion) in securities at Deka Group in Frankfurt. "I'd buy the shares for less than 25 euros." Goldman Sachs Group Inc is the global coordinator for the share sale, while Deutsche Bank AG, which was one of the banks managing Infineon's initial public offering in March last year, will not participate. German daily Handelsblatt earlier said Deutsche Bank had suggested a sale of convertible bonds, rather than the capital increase, which will dilute outstanding shares.
"It's not the best time to sell shares," said Frank Joachim, a technology fund manager at HSBC Trinkaus Capital Management in Dusseldorf, which manages about 10 billion euros.
Joachim said he would pay 22 to 23 euros for Infineon shares.
The company plans to offset the drop in memory prices by selling more chips for the automotive and telecommunications industries. Marconi Plc, the biggest UK phone-equipment maker, said last week full-year profit would fall by half.
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