Dog walking startup Wag in merger talks with CHW SPAC: sources

[NEW YORK] Dog-walking startup Wag Labs is in talks to go public through a merger with CHW Acquisition Corp, according to people with knowledge of the matter.

The special purpose acquisition company is in discussions to raise funds for a private investment in public equity, or PIPE, to support the transaction with Wag.

The combined entity is set to have an enterprise value of about US$350 million, the people said, declining to be named discussing private information. The transaction value is based on a multiple of projected revenue of about US$42 million in 2022 and US$71 million in 2023.

Terms aren't finalised and it's possible talks could collapse. Representatives for Wag didn't immediately respond to a request for comment. A CHW representative declined to comment.

CHW, the blank-cheque firm, is led by president Paul Norman, a former Kellogg executive and co-chief executive officers Jonah Raskas and Mark Grundman. It raised US$125 million in an August initial public offering, and has said it will target a merger in the consumer and retail sectors.

Wag experienced significant growth during the pandemic as US households raced to adopt pets, which CEO Garrett Smallwood last year described as "pawgress" in an email to Bloomberg Businessweek.

The startup, which counts Battery Ventures and ACME as investors, in 2019 repurchased a 50 per cent stake in itself from SoftBank Vision Fund. SoftBank first invested US$300 million in the company in 2018.

Rover Group, another company that provides pet care services including dog-walking, went public through a SPAC merger last summer. Its shares have tumbled 37 per cent since the merger.

BLOOMBERG