Sandal maker Birkenstock’s $1.48 billion initial public offering sent its shares down 12.6%, potentially cooling a nascent listing rally.
The German company’s debut was the worst first-day performance for a U.S. company of $1 billion or more in more than two years, according to data compiled by Bloomberg. Of the more than 300 U.S. IPOs of this size over the past century, only 13 have fared worse, the last of which was AppLovin Corp., which closed 18.5% below its IPO price in April 2021, the data shows. .
In the fourth big test for U.S. markets in a month, the German shoemaker’s shares opened at $46 in the IPO and opened Wednesday at $41 a share. The offering was priced below the midpoint of the market price range of $44 to $49, with Birkenstock and its private equity owner L Catterton selling about 32 million shares on Tuesday.
The stock closed at $40.20 in New York trading, giving the company a market capitalization of $7.55 billion. Including shares reserved for executive officers, directors and employees, the company’s diluted value is approximately $8.15 billion.
“The strong first-day gains earlier this year may have attracted some ‘hot money’ into some recent IPOs, allowing them to be priced higher,” said Matthew Kennedy, senior IPO market strategist at Renaissance Capital. “But aftermarket buyers are now Having been burned by IPOs many times, it’s no surprise that this time they finally threw in the towel and refused to pay.”
The company sold 10.8 million shares, while L Catterton sold 21.5 million shares. The acquiring company and its affiliates will continue to own about 83% of the stock and control the company, according to documents filed with the U.S. Securities and Exchange Commission.
The offering was led by Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley. Birkenstock stock trades on the New York Stock Exchange under the symbol BIRK.
mixed performance
The IPO marked the largest number of U.S. listings in a month since January 2022, according to data compiled by Bloomberg. British chip designer Arm Holdings Plc, backed by SoftBank Group Corp., raised $5.23 billion in so-called greenshoe stocks in September, followed by grocery delivery startup Instacart, which raised $6.66 Marketing and data automation provider Klaviyo Inc. raised $576 million in its IPO.
Arm’s stock price is up 7.2% from the IPO price, while Instacart’s stock price is 17% lower than the issue price. Klaviyo was the best performer, but its IPO investors received a 12% return even as the share price rose 22.5% when it first traded.
The mixed performance of those three companies, and now Birkenstock, has heightened concerns about whether dozens of startups that have been eyeing the public markets will decide to move forward or wait.These companies include a diverse range of businesses such as sportswear brands mountain company, weight loss drug dealer kamot therapy and Game Changing Solar EnergyIts backers include an affiliate of Koch Industries and other candidates, according to Bloomberg.
Last week, Birkenstock, Triton got closer to home Delay German gearbox maker Renk AG plans to sell shares after global stock markets plummeted. French software company Planisware postponed its initial public offering on Euronext Paris on Wednesday, citing challenging market conditions.
Birkenstock profits
Unlike many potential IPO candidates, Birkenstock is profitable. For the nine months ended June 30, the successor company’s net profit was 103 million euros ($109 million) on revenue of 1.12 billion euros, compared with 129 million euros on revenue of 925 million euros in the same period last year. its files.
Birkenstock plans to use proceeds from the offering to pay down debt.
The family holding company of billionaire LVMH chairman Bernard Arnault has invested in Birkenstock and plans to buy $325 million worth of shares in the IPO. Norwegian sovereign fund and T. Rowe Price Group Inc. veteran Henry Ellenbogen’s Durable Capital Partners LP has expressed interest in buying shares totaling up to $300 million, documents show.
Documents show that as much as 8% of the shares in the listing have been reserved for employees at the IPO price.
fashion collaboration
Founded nearly 250 years ago and sold in the United States since 1966, Birkenstock sandals are now a favorite among preppies and hippies. The company has become a high-fashion brand, collaborating with luxury brands such as Dior, Manolo Blahnik and Valentino, and launching variations from the likes of Celine and Givenchy.
Birkenstock sales have been boosted recently by this blockbuster Barbie In the movie, star Margot Robbie wears a pair of pink Birkenstocks in one scene. This increases the brand’s multi-generational appeal, with Millennials accounting for 31% of its sales and Baby Boomers 30%.
The IPO comes more than two years after L Catterton and Arnault’s family investment firm acquired a majority stake in the company at a valuation of about €4 billion. Since then, Birkenstock has been investing heavily in building production bases in Germany, including building a new €120 million factory in the town of Parsewalk, north of Berlin.
Two other shoe manufacturers have underperformed since going public in 2021. Shares of the Zurich-based On Running shoe company, which didn’t turn a profit until last year, have risen 2.8% since its IPO, while Allbirds Inc. has gained 2.8%. Shares of the IPO sold for $15. Shares are trading now Priced at about 94 cents, its losses are expected to continue to widen.
L Catterton managing partner Nikhil Thukral said in an interview before the deal began that the firm was in no rush to exit Birkenstock. He said the footwear maker had performed well during previous turbulent times.
“While the last two weekends have been incredible, we have been through similar times in the past few years – the pandemic, the war in Ukraine – and business performance has not been affected by these issues,” Tukral said. “What? Is it a great brand? In a market like this, you find out if there is something extraordinary.”
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