In its first day of trading, Agency.com (Nasdaq Symbol: ACOM) wowed the crowd with a $26 per share offering and closing at $76 per share. In the middle, the stock dallied in the $90s. The 5.9 million shares offered as common stock were heavily traded with a volume of 8.2 million. All this also earned it third place in Nasdaq's "most advanced" stocks category behind Linux community Andover.Net and electronic software distribution firm Preview Systems.
The company reported $76 million in pro forma revenue for 1998, including revenue from rollup acquisitions. Net losses for 1998 were reported to be $22 million. But today's trading, based on 33.7 million outstanding shares, give the company a market capitalization of $2.5 billion.
For sake of comparison, distribution king Ingram Micro's market capitalization is $1.9 billion with $245 million in revenue during 1998.
Agency.com explains just where its new-found riches will go in its S1 SEC filing, a document amended some 10 times since it was first filed with the SEC on September 2 this year. The company changed its planned offering price from $12 per share to $24 per share in an amended filing on December 2. But on the morning of its offering, Agency.com again increased this figure to $26 per share. They needn't have bothered-the stock's first recorded trade was at $91 per share, four times its offering price.
According to the SEC documents, net proceeds of the sale, after deducting $2.5 million for underwriting costs and other expenses, will be used to partially repay a debt to majority owner Omnicom Group. This amount has a maximum cap of $25 million.
Agency states it has "not made any specific plans with respect to the remaining proceeds of the offering." But the company does have plans "over time" to expand its operations through hiring and "through strategic investments or acquisitions."
Agency doesn't name any potential candidates, but it does say that it is "currently engaged in discussions with respect to the possible acquisition of a U.S.-based interactive direct marketing company." But the negotiations aren't going well: "the consummation of this acquisition is not currently probable."
At least for the next sixty days, and sometimes more depending on the particulars of the SEC's Byzantine rules, the principals of Agency.com are holding personal fortunes on paper. Following sixty days, in general, the principals can sell some or all of their holdings as they choose. The owners gave up 18 percent of the company to be publicly traded. The remaining 82 percent is split among a group of principals and investors.
By far, the largest of these investors is mega-media holding company Omnicom Group with 46.6 percent of the company stock following its offering.
Co-founders Chan Suh and Kyle Shannon took the gamble that paid off in todays' trading. Each of the men took larger company shares in lieu of a high salary. Suh, 38 year old CEO and president holds 14.1 percent of the stock, worth some $361.5 million today. Shannon, 34 year old chief creative officer and director holds 13.6 percent of the stock, worth some $348 million today.
Photograph (c) Copyright 1999, The Nasdaq Stock Market, Inc.
Reprinted with the permission of The Nasdaq-Amex Market Group.