LONDON (Brand Republic) - News and information group Reuters lost about £1bn of its value yesterday, after announcing it was to go ahead with plans to float its electronic broking business Instinet.
At close of trade yesterday, Reuters shares were down 9.3% to 775p, after it confirmed it would defy market sentiment and float up to14.1% of Instinet on the Nasdaq stock exchange. In trading this morning, its stock fell as low as 740p before rallying to 780p.
The IPO will value Instinet at $2.6bn-$3.4bn (£1.81bn-£2.37bn), well below initial expectations of $4bn (£2.79bn).
Instinet, which provides information to financial institutions and relies on Nasdaq volumes for its revenue, registered the IPO with the Securities and Exchange Commission in February. However, the market has taken a downturn since then, and high-tech stock exchange volumes have fallen dramatically.
Some analysts questioned the timing of the IPO and suggested that corporate pride had prevented the company from ditching flotation plans. Supporters of the flotation said that it will generate revenue for Reuters to re-invest in the business.
www.reuters.com
www.instinet.com