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MasterCard IPO comes in below price expectations

MasterCard began trading May 25 with a share price of $39, $1 to $4 lower than what was expected. But by the time the market closed Thursday, shares rang in at $46 apiece.

May 30, 2006

NEW YORK - MasterCard Inc. began trading on the New York Stock Exchange May 25 with a share price of $39, below the company's previously announced expected per-share range of between $40 and $43. By the time the market closed Thursday, the share price had jumped $7 to $46. About 61. 5 million shares, 46 percent of the company - began trading under the ticker symbol MA.

The $2.39 billion offering is one the market's largest in two years, beating out the $1.7 billion raised by Google Inc. in 2004 when it went public.

The Associated Press reported that several factors weighed on the trading price, including erratic market conditions and looming legal and regulatory problems. The ongoing battle with retailers over interchange has strained MasterCard. (Read also, Interchange wars: Merchants tug networks for change.)

MasterCard is expected to use about $650 million raised in the public flotation to protect itself from legal woes. Last year, merchant groups filed a class-action suit against MasterCard and Visa USA Inc., alleging the two companies unlawfully fixed fees that hurt merchants and consumers. (Read also, Retail group sues MasterCard, Visa.)

American Express Co. and Discover Financial Services LLC also have sued MasterCard and Visa for anticompetitive practices.

David Menlow, president of IPOFinancial.com, told the AP the lower-than-expected price "reflects buyers' concerns with uncertainty of pending litigation."

All that being written, the MasterCard offering is expected to attract investors. The world's No. 2 credit-card company, which is owned by member banks, is valued at approximately $6 billion.