Baltimore Technologies, the Irish-founded Internet security company, has announced plans to raise £95 million sterling (€147 million) when it offers its shares on the Nasdaq, the major US electronic exchange, at the end of October.
Baltimore, listed on the London Stock Exchange, has a market capitalisation of around £525 million sterling. The additional funding will be used to fuel a strategy of aggressive expansion in the US.
About 50-60 per cent of the offering will be in the US. The remainder will be offered in Europe, with around 30 per cent reserved for the British market.
The news had a modest effect on Baltimore's London share price, despite the issue of 8.5 million shares representing a fairly strong stock dilution. The shares closed at £11.40, down 10p.
In the Republic, Goodbody Stockbrokers is underwriting the offer, and, according to spokesman Mr Liam Booth, strong institutional demand is expected from Irish investors and overseas companies interested in Irish technology stocks. At least 10 per cent of the issue is expected to be made available to these interested parties.
The US share price will be closely aligned to Baltimore's London value and, given the target tally of £95 million, Baltimore would be expected to open at around £11.91 on its first day of trading. Mr Dermot Desmond and Intel hold stakes in Baltimore of 15 per cent and 6.26 per cent respectively and will not be offering their shares in this round.
The company has said it will offer 8.5 million shares, comprising 7.97 million new shares and 525,000 existing shares. Of the existing shares, Mr Fran Rooney, Baltimore chief executive, will offer 150,000 family shares, Mr Henry Beker, Baltimore chairman will offer 300,000 shares, and Mr Matthew Bowcock, vice-president of corporate development, will offer 50,000 shares.
With the global encryption and security software industry expected to grow by a factor of eight in the next two years, Mr Rooney told The Irish Times the additional funding would provide Baltimore with a "war chest going forward".
"We have a very clear merger and acquisition strategy, and after the Nasdaq listing we want to aggressively move forward," he said. He added that Baltimore wanted to raise only £95 million, and, should the offering be oversubscribed, the number of shares issued could be reduced. The global offer will be underwritten by a syndicate including Lehman Brothers, Merrill Lynch International and Goodbody Stock brokers.
Until now, Baltimore has traded at a considerable discount to its larger US rivals, Entrust and VeriSign. Recently, analysts Beeson Gregory observed Baltimore stock warranted a valuation closer to that of main rival VeriSign.
