Yet Mead Johnson still had to shrink its estimate of the IPO's proceeds from $1 billion when it originally filed in the fall, a concession to the tough market.

"They could be doing a much bigger IPO," said Scott Sweet, senior managing partner with research firm IPO Boutique.

CASH COW

After the IPO, Bristol will still have plenty of room to raise more money off of Mead Johnson, through secondary offerings, particularly if the markets recover and follow-on share issues fetch high prices.

Bristol would still own about 87.5 percent of Mead Johnson, and retain 98 percent of voting power, according to a regulatory filing.

Major companies sometimes spin off companies gradually over several years to generate a steady flow of cash.

For example, Nestle SA has used its remaining stake of its Alcon Inc (ALC.N: Quote, Profile, Research) eye-care unit, which it spun off in a $2.53 billion IPO in 2002, as a cash cow. Last year, the Swiss food company said it could use proceeds of subsequent sales of its Alcon stake for acquisitions.

Still, the fact that Bristol will keep such a large stake could also hurt Mead Johnson when the IPO prices on Tuesday, an analyst said.

"This is definitely not a clean spin-off; Bristol Meyers will be in firm control," said Sam Snyder, an analyst with Greenwich, Connecticut-based Renaissance Capital.