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Despite a Sizzling IPO Market, These 4 Firms Are Backing Out


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Bloomberg San Francisco
Jeff Chiu/AP
So far, 2014 has been a high-scoring year for initial public stock offerings. The first quarter saw more IPO activity than any other initial quarter since 2000, with 64 companies listing on various U.S. exchanges raising a collective $10.6 billion. That's more than double the number of IPOs that took place in the first quarter of 2013.

This is directly related to the health of the overall stock market. Generally speaking, the better shares are performing, the higher the chance of an issuer being successful on IPO day. After all, who's eager to buy anything when the market's in the doldrums?

Yet even in a good environment for IPOs, companies occasionally get the jitters and withdraw their listings. Sometimes this is due to the overall atmosphere on the market; sometimes it's because of difficulties with the issuing company itself; sometimes it's both. Whatever the reason(s), the notable examples below scampered away before they could become publicly traded entities.


One of the top anticipated IPOs of 2014 was for this cutting-edge e-commerce company, which pioneered the use of smartphone and tablet payment card readers. Then there's Square's impeccable geek credentials, thanks in no small part to its founder-CEO Jack Dorsey, who was one of the guiding lights behind Twitter (TWTR).

That, apparently, wasn't enough to bring it to market. In late February, media reports had it that the company postponed its planned IPO indefinitely. It seems that it's burning through cash very quickly and doesn't have enough revenue to cover this.

Instead of listing on an exchange, the firm is reportedly looking for a deep-pocketed suitor and has allegedly held discussions with Google (GOOG), Apple (AAPL) and eBay (EBAY), and possibly even one of its investors, Visa (V), regarding a potential buyout. Square denies it has been in acquisition talks.

Trustwave Holdings

Another nonstarter in the tech IPO space was Trustwave, which provides on-demand data security solutions. After Target (TGT) suffered a large-scale breach of its credit card data last November, both the retailer and Trustwave were sued by a pair of regional banks that claimed they suffered financial damages from the incident.

Trustwave claimed that it didn't outsource data security to Target (it's hard to tell -- such arrangements are usually confidential). Nevertheless, the lawsuit attracted the wrong kind of publicity before the banks dropped it in April.

Interestingly, Trustwave's cancellation of the IPO was its second; the first was a flotation planned for August 2011. This time, the company was to sell 6.25 million shares priced at $15 to $17 apiece on the Nasdaq. The underwriting syndicate was led by heavyweights Morgan Stanley (MS), JPMorgan Chase's (JPM) J.P. Morgan unit and Barclays (BCS) Capital.

Sundance Energy Australia

The world just can't get enough energy; oil and gas markets are thriving these days. Combine that with a strong market for IPOs, and you've got a bunch of new issues in the energy sector listing on stock markets.

Sundance Energy Australia had planned to complement the extant listing on its native exchange by floating nearly 7.8 million American depository shares on the Nasdaq. The issue was slated for this past February and was to be lead-underwritten by Wells Fargo (WFC) Securities, Canaccord Genuity and UBS (UBS) Investment Bank. But in April the company pulled the issue due to market conditions.

That's a shame, as Sundance likely would have attracted investor interest given that it has a presence in rich U.S. plays such as the Bakken formation in the Midwest. Although the company's net result hasn't always been positive, Sundance almost doubled its top line on a year-over-year basis in the first nine months of 2013.

Associated Materials

The building materials sector is home to this 67-year-old company, which did not specify a reason for withdrawing its planned IPO this April. Market weakness probably had at least something to do with it; on the same day it bagged its issue, three other stocks coming to market priced below their anticipated per-share ranges.

Fundamentals might also have been a factor. Both the current form of the company and its immediate predecessor have generally been unprofitable since 2009, and revenue has dropped in recent times. This is the sort of combination that gives investors pause.

Regardless, a trio of busy financials -- Goldman Sachs (GS), Barclays and UBS Investment Bank -- were set to lead-underwrite the issue, which was planned to raise up to $100 million on the Nasdaq or New York Stock Exchange.

Motley Fool contributor Eric Volkman has no position in any stocks mentioned. The Motley Fool recommends Apple, eBay, Goldman Sachs, Google (A and C shares), Twitter, Visa and Wells Fargo. The Motley Fool owns shares of Apple, eBay, Google (A and C shares), JPMorgan Chase, Visa and Wells Fargo and has the following options: short June 2014 $50 calls on Wells Fargo and short June 2014 $48 puts on Wells Fargo.


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