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Blue Apron raises US$300 million after slashing IPO price
[NEW YORK] Meal kit delivery company Blue Apron Holdings Inc raised US$300 million in its initial public offering (IPO), pricing at the bottom of its already reduced marketed range.
Thirty million Blue Apron shares at US$10 apiece were sold, the New York-based company said in a statement. That gives Blue Apron a market value of almost US$1.9 billion. The company initially marketed the shares for US$15 to US$17 each before decreasing the range by a third on Wednesday to US$10 to US$11.
Blue Apron has been overshadowed by Amazon.com Inc's agreement to buy Whole Foods Market Inc for US$13.7 billion just three days before the meal-kit company launched its IPO. The takeover sent grocery stocks tumbling. Blue Apron's management tweaked its deal pitch to distinguish it from a grocery delivery service, a person familiar with the matter said last week.
Goldman Sachs Group Inc, Morgan Stanley, Citigroup Inc and Barclays Plc led the IPO. The company is expected to begin trading Thursday on the New York Stock Exchange under the symbol APRN.
Blue Apron's price cut was the second-biggest decrease in a marketed price range for US-listed IPOs in the past five years, according to data compiled by Bloomberg.
The company had initially sought to raise US$510 million, which would have given it a market value of as much as US$3.2 billion. Having raised less money, the company said in a filing it no longer intends to pay down debt with the proceeds. Instead, the funds will all go toward working capital, capital expenditures and general corporate purposes.
Soba, Chicken Blue Apron sends boxes of pre-portioned ingredients and instructions for customers to cook meals at home. The US$59.94 box, with recipes such as sesame soba noodles and soy-marinated chicken thighs, includes ingredients for three meals for two people. About 1 million customers use the product, according to the IPO prospectus.
The Amazon deal is especially pertinent to Blue Apron because its meal kits with fresh, high-end ingredients appeal to a similar customer base as Whole Foods: The top 10 per cent of households by income, according to Kurt Jetta, chief executive officer of retail and consumer analytics provider Tabs Analytics.
Blue Apron has said it reaches only 0.7 per cent of its addressable market of U.S. households. Those customers have been ordering fewer, cheaper meal kits. At the end of the first quarter, Blue Apron had 1 million customers who made 4.1 orders each - compared with 649,000 customers making 4.5 orders apiece a year earlier. The average order value fell to US$57.23 from US$59.28 in the same period, while average revenue per customer slipped to US$236 from US$265.
The company has warned that it may never turn a profit. Its net loss widened to US$54.9 million in 2016 from US$47 million a year earlier, despite net revenue climbing to US$795 million from US$340.8 million in the same period, the prospectus shows.