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Summary
- Grill maker Weber slashed its IPO price by over 60%, selling less shares than marketed at a price below the expected range.
- The company raised around US $250 million by selling almost 18 million shares, raising its market cap tonearly US $4 billion.
Global leader in outdoor grills Weber’s IPO plans went from sizzle to fizzle despite slashing the launch price by almost 60%. As the company finalised its floatation late on Wednesday, it agreed to a price-cut listing. It initially marketed a higher price for its shares to the investors, but it sold fewer shares than expected that too at a lower price.
On August 5, the Weber IPO under the ticker WEBR got launched on the New York Stock Exchange (NYSE). Initially, the planned price range of the shares was set at US $15-$17, but the shares were actually sold at US $14. The company initially marketed to sell around 47 million shares. By selling almost 18 million shares at US $14, the IPO raised US $252 million, which was less than a third of its target of US $797 million.
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Goldman Sachs, Bank of America Securities, and JP Morgan were the underwriters of the transaction. As trading of its shares began on Thursday, its price rose as much as 23 per cent to US $17.25. Within just a few minutes, the company lost a significant part of those gains by trading at a lower price of around US $15.55. Last year in November, the company was worth US $2.4 billion approximately as per its fundraising round of US $35 million in the same month.
But after its listing in August 2021, Weber’s market capitalisation is now down to US $4 billion, as per the outstanding shares listed in its filings with the US SEC (Securities and Exchange Commission). This happened amid the bumper period for new US listings, in which traditional companies have raised over US $100 billion this year, as per EODHD/Others’s data.
In the last fiscal year, the revenue of the company grew by around 18% to US $1.5 billion, the profits too increased by 77% to US $89 million.
The Covid-19 pandemic may have played a great role in the growth of its business, with people shifting their preference from eating out to cooking at home. This surge in home cooking has positively impacted the overall industry, and the lockdown has been quite favorable for the grill industry, thus attracting an influx of investors. According to a market research company, NPD Group, the last 12 months to June in the US have witnessed a significant 29% increase in the sales of smokers, grills, and grilling accessories, reaching to US $5.9 billion.
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The Illinois-based manufacturer of outdoor grills and grill accessories was originally founded in 1893 as Weber Bros Metal Works. The company started off many Weber Grill steakhouses and BBQ restaurants in the 1980s, of which some are still operational. As of August 2021, the company has a substantial geographical footprint across around 80 countries, and has sold 50 million grills, accounting for a 24% market share worldwide. It has a significantly huge customer base across Europe, North America, Latin America, Asia Pacific, and Africa. The major competitors of Weber are Traeger, Fuego, Nexgrill, and Canadian operator Broil King.
Beating Weber in the IPO run, Traeger, which owns a significant share of the pellet grill/smoker market, raised its market cap to US $3.3 billion with its shares rising by over 50% since its IPO. The debut of Weber took place ahead of the traditional summer break as the US capital markets wind down, due to which several other listings were postponed due to the prevailing market conditions in the past week, including the US $765 million IPO of Leonard Green-backed WCG Clinical Inc. planned on Wednesday.
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Weber is among the few companies which found it hard to find a footing in what had been a robust IPO market. As per the Dealogic data, the maximum IPO deals withdrawn or cancelled since 2016 were in the last week. But outdoor grill and accessories companies, like Weber and Traeger, are trying to capitalise on the increasing demand of grilling products due to the coronavirus pandemic.
