PHOENIX -- Dial Corp. announced an initial public offering Wednesday on 20 million shares of Motor Coach Industries International Inc. at $13 a share -- a price at the low end of analyst expectations.
Dial is spinning off its transportation-manufacturing and service- parts subsidiary through the IPO, with shares of Motor Coach Industries International slated to start trading Thursday on the New York Stock Exchange under the symbol 'MCO.'
Dial announced in October 1991 that it was contemplating either a sale or initial public offering of the operations in order to focus on its core businesses of consumer products and services. It also moved at that point to divest its financial and insurance operations and subsequently spun those off as Greyhound Financial.
The transporation-manufacturing segment, which consists of Motor Coach Industries, Transportation Manufacturing Corp. and Universal Coach Parts Inc., generated about a quarter of Dial's $3.5 billion in annual revenues.
The shares are being sold through an underwriting syndicate led by Salomon Brothers Inc. and Lehman Brothers. Dial had earlier announced a target price of $14 to $16 for the shares and its board subsequently approved selling the shares at a range of $13 to $16.
'The $13 price is very acceptable,' said John W. Teets, chairman, president and chief executive officer of Dial.
'The completion of the sale continues our plan to target our consumer products and services businesses for future growth,' Teets said. 'After the offering, Dial will be in a very strong financial position, and the predictability of earnings will be significantly improved.'
Teets said the bus industry is currently in the early stages of recovery and that the new company, with economies of scale in design, manufacturing, and parts and service operations, offers strategic and competitive advantages.
'The transit bus segment, which has been unprofitable the past couple of years, should benefit from recovering federal, state and local budgets, an improving economy and continuing environmental pressures,' he said.
Motor Coach Industries International reported a 41 percent increase in income from continuing operations of $11.6 million on sales of $269 million.
Dial said the proceeds will be used to invest in its core businesses and pay down debt.
In June, Phoenix-based Dial completed the sale of its Greyhound Canada Inc. transit bus manufacturing business in Quebec to Novabus Corp. and Novabus of America Inc. for an undisclosed price.
Dial completed last month the acquisition of the Renuzit line of air fresheners. Terms were not disclosed, but the deal is expected to increase Dial's revenues by more than $115 million annually.