How Unionization Affects IPO Pricing

In 2000, Overnite Transportation Co. halted its IPO because of a highly disruptive 10-month strike by the Teamsters’ Union. Teamster officials said they had achieved some gains through the strike, noting that Overnite had increased its employees’ hourly wages by $5.25, to $19, and improved pensions and health coverage. In its S-1 prospectus, though, Overnite indicated that the strike had not achieved any other concessions. Nonetheless, the company had to delay its IPO until October 31, 2003. The company sold 25 million shares at $19 each and managed to raise $475 million. This amount probably could have been higher if … Read more