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Weber, a barbecue behemoth, agreed to a cut-price listing as it finalised its flotation late on Wednesday, selling fewer shares than initially expected at a price below a range it had marketed to investors, according to a person briefed on the matter.
The Illinois-based company, founded in 1952 and sold to merchant bank BDT Capital Partners in 2010, priced 18m shares in the flotation at $14 apiece. The IPO raised $252m for the group, dramatically below expectations set late last month as it marketed the offering to big money managers. At the time it hoped the IPO would raise as much as $797m. BDT will retain voting control after the listing.
The shares briefly popped higher as trading began on Thursday, rising as much as 23 per cent to $17.25. Within minutes of the first trade Weber had given up a substantial portion of those gains to trade around $15.55.
The pricing of the IPO sealed Weber’s market capitalisation at just under $4bn. It came during a bumper period for new US listings, with more than $100bn raised by traditional companies so far this year — a record pace — according to data provider Refinitiv.
However, while the $50tn US stock market has hit a series of new highs, institutional investors have not kept pace with the deluge of new offerings with some sitting out recent listings after investing large sums in IPOs earlier this year.
In recent days, other stock offerings have been postponed or seen poor first day trading. Last week Clarios, the car battery manufacturer owned by Brookfield, postponed its float, pointing to market conditions, while produce company Dole slashed the size of its IPO.
The lacklustre showing for Weber may undercut a maxim embraced by investors since the coronavirus pandemic upended consumers’ routines: that the backyard is the new living room.
Many of the Americans who raced to buy up homes in leafy hamlets across the country also indulged in relatively large purchases such as pools, outdoor furniture and grills.
“These are businesses that benefited from the stimulus money and the increased level of purchasing power that consumers had because it allowed them to pull forward a little bit of demand,” said David MacGregor, an analyst at Longbow Research.
Weber’s revenues grew 18 per cent to $1.5bn in its past fiscal year, while its profits climbed 77 per cent to $89m.
The company’s IPO comes just days after rival Traeger, a maker of wood pellet grills, listed its shares publicly. Traeger’s stock, which it sold at the high-end of a range marketed to investors, has climbed more than 50 per cent since its IPO to value the business at $3.3bn.
A banner year for the industry had seemingly whet the appetite of investors. Sales of grills, smokers and grilling accessories in the US in the 12 months to June reached $5.9bn, a 29 per cent increase from the year before, according to NPD Group, a market research company.
The strong growth exhibited by the likes of Weber and other leisure companies nonetheless had left analysts questioning how long the outdoor boom can last. Shares of Leslie’s, a retailer of swimming pool supplies, surged more than 85 per cent from its IPO late last year to a closing high in January. But since then, the stock has trodden water.
“Nothing will beat the peak of what we saw in 2020,” said Joe Derochowski, an analyst at NPD Group. “However what it’s done is it has reset the bar for grilling to leverage for the rest of the decade. And so now the door is open, the question is how well do [grilling companies] respond to it.”
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