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. Last Updated: 07/27/2016

Frenzy Greets Deutsche Telekom IPO

FRANKFURT -- Shares in Deutsche Telekom AG roared higher in a buying frenzy Monday as Europe's biggest stock offering came to a head, marking a revolution for Germans who traditionally have been wary of volatile stock markets.


After initial indications that shares were trading in a range of 31 to 34 Deutsche marks ($20 to $22), the stock exchange quoted the first official price in mid-session at 33.20 marks. It closed exchange trading at 33.90.


The exchange exploded into a frenzy of activity, and more than 25 million shares changed hands by midday. Almost 38 million had changed hands when it closed.


About 100 traders rushed market makers to place orders and shouted in unison "33.20! 33.20!" as Telekom chairman Ron Sommer and German Finance Minister Theo Waigel waded into the crowd with broad smiles on their faces.


In early trading Monday on the New York Stock Exchange, Deutsche Telekom was trading 17 percent higher than its initial offering price of $8.89.


The stock issue, worth up to 20 billion marks ($13 billion), is second in the world only to the 1987 listing of Japan's Nippon Telegraph and Telephone Corp. It has investors hanging on the edge of their seats as they search for clues as to where the shares are headed.


The chief executives of Germany's leading banks -- Deutsche Bank AG and Dresdner Bank AG -- who had coordinated the global listing stood on stairs overlooking the trading floor evidently pleased as new life seemed to pour into Germany's stock market.


"This moment is a milestone in the development of the market," said Werner Seifert, chairman of Deutsche Boerse AG, umbrella group for Germany's eight regional stock exchanges.


"This is a decisive contribution to strengthening the equity culture among private investors in Germany."


The road to Frankfurt, Germany's main stock market, was a long one for Deutsche Telekom, which, with annual sales of 66 billion marks, is Europe's biggest telecommunications group.


In 1989 the government split it off from the postal authority, and in 1995 it became a joint stock company owned by the state. After the issue of 713 million shares, the public now owns 26 percent of Telekom.


Marking a watershed in German investment culture, nearly 2 million ordinary Germans shed fears of "risky" stock investments and cracked open their piggy banks to buy Telekom shares, making up just under half of the total offering. Shares were also snatched up at the 28.50-mark issue price by institutional investors around the world, which exchange and government officials said should pave the way for other German companies to make such global share offerings.