Online cattle auctioneer EMerge Interactive (Nasdaq: EMRG) soared 32 1/4 to 47 1/4 Friday after pricing its 8 million share offering at $15 a share. Shares of eMerge opened at 25.
Investors were expected to bid eMerge higher because it's a business-to-business player. The IPO priced above its revised range of $12 to $14.
Adams Harkness and First Union Securities and FAC/Equities are the underwriters.
Of the 8 million share offered, 6.5 million are offered by eMerge and 1.5 million are being sold by existing shareholders. Safeguard Scientifics, Inc. (NYSE: SFE), a major shareholder of eMerge, will distribute 2.8 million shares to its shareholders at that IPO price. Internet Capital Group (Nasdaq: ICGE) is also an eMerge shareholder.
In filings, eMerge said its goal is to be the leading business-to-business online marketplace for the livestock industry. Given the performance of VerticalNet (Nasdaq: VERT), Commerce One (Nasdaq: CMRC), FreeMarkets (Nasdaq: FMKT) among others, eMerge (profile) could have a hot IPO.
EMerge shows just how far-reaching B2B can be. Take any inefficient market and you have a niche to be a B2B player. EMerge provides cattle sales and auctions, performance analyses of a customer's feedlot operations, industry analysis, cattle inventory tools and livestock health products.
B2B is becoming a market of niches -- which isn't so bad. Chemdex (Nasdaq: CMDX) and SciQuest.com (Nasdaq: SQST) have done pretty well since their IPOs.
And eMerge's revenue isn't bad relative to other B2B players. For the nine months ending Sept. 30, eMerge reported sales of $18.5 million and a loss of $11 million. Ninety percent of eMerge's sales derived from online cattle auctions. For perspective, VerticalNet, which reported fourth quarter earnings on Tuesday, had revenue of $10.7 million for the first nine months of 1999.
In filings, eMerge said it pulls in revenue through online cattle auctions, subscription fees for its information management services and industry reports, and sales of its proprietary products.
EMerge's products include Cyberstockyard.com, a cattle auction site, the Feedlot Information System, an information management package, PCC-online.com, a consultant service, and NutriCharge, a feed supplement. More information can be found at CattleInfoNet.com.