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Chewy increases price range of IPO days before due date
Posted on Thursday, 13 June 2019 11:15
Online pet products retailer Chewy has increased the pricing of its planned initial public offering (IPO), due to take place at the end of this week, from USD 17.00 to USD 19.00 per share to USD 19.00 to USD 21.00 apiece.

The company, which was co-founded by Ryan Cohen in 2011 before being sold to PetSmart for USD 3.35 billion in 2017, has risen the price range as advisory firm IPO Boutique said the guidance it has received is that the deal is multiple times oversubscribed.

Chewy registered initial documents with the US Securities and Exchange Commission at the end of April and said it had appointed Allen & Company, JPMorgan and Morgan Stanley as underwriters.

Earlier this month, the group said it will sell 41.60 million shares, 5.60 million of which is new common stock and the rest will be offloaded by PetSmart, which intends to remain a majority stockholder following completion.

At the same time, Chewy priced the IPO at between USD 17.00 and USD 19.00 apiece to raise a total USD 908.96 million if the overallotment option of 6.24 million scrips is exercised in full at the highest price.

The business, which sells pet foods, toys, litters, beds and other forms of supplies, has also added Bank of America Merrill Lynch, Barclays, Jefferies and RBC Capital Markets, among other underwriters, to the flotation and is now expecting shares to be sold at a potential USD 21.00 per item of stock.

Should the green shoe option be fully taken advantage of and the price being at the new suggested high, Chewy could receive proceeds of around USD 1.00 billion.

This would make the IPO among the top five US-based companies to go public this year, according to Zephyr, the M&A database published by Bureau van Dijk.

Others have included ride-hailing platforms Uber Technologies and Lyft, pharmaceutical chemicals manufacturer Avantor and online scrapbooking group Pinterest.

Chewy partners with over 1,600 industry brands with customers making over 100.00 million orders since the company’s founding in 2011.

The group generated net sales of USD 1.11 billion in the three months to 5th May 2019, up 45.4 per cent from USD 763.46 million in the corresponding period of 2018.

Chewy recorded an adjusted loss before interest, taxes, depreciation and amortisation of USD 29.55 million in Q1 2019, with founder Cohen, who is no longer with the company, telling Tech Crunch the group is not yet profitable because its continuing to execute on scale and market leadership.

© Zephus Ltd