Chewy Raises $1B In Upsized IPO

Daniel Fowler
June 16, 2019

Chewy's shares rose as much as 88% in the first hour of trading Friday from the $22 offer price. The IPO values Chewy at nearly three times the $3.35 billion PetSmart paid for the company.

In response, PetSmart acquired Chewy in 2017, adding $2 billion to PetSmart's debt load to do the deal.

"Public companies pay their employees in stock options", he said.

The offering was the sixth-biggest out of 78 in the USA this year, according to data compiled by Bloomberg. From the offering, Chewy raised just over $1 billion in fresh funding.

Roughly 68 percent of U.S. households have pets and they paid $72.6 billion to care for them in 2018 - up from $43.2 billion in 2008, according to data from The American Pet Products Association.

Chewy was founded in 2011 and was bought six years later by pet store chain PetSmart for more than $3 billion.

"Pet parents" continue to spend even in times of economic uncertainty.

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"If (Chewy) can clear legal and registration hurdles, they'll have no trouble competing out there", said Phillip Cooper, an independent consultant who advises pet industry investors.

"Our customers realize that we truly care", Cohen said.

Chewy is the latest high-profile unicorn IPO to launch with a smash, following in the footsteps of gig economy network Fiverr on Thursday and cybersecurity firm CrowdStrike earlier this week. What's more, only two years after the fact, PetSmart, which is possessed by a gathering of private value financial specialists driven by BC Partners, spun Chewy off into an open organization on Friday.

Chewy is also considering expanding overseas, as well as expanding in-house brands and pet pharmacy offerings. PetSmart was to have 70% of the total shares and 77% of the voting power, the filings show. And despite being in the red, Chewy grew 68 percent past year. The IPO was initially targeted in the $19-21 range but it was bumped up and priced yesterday at $22. Chewy started trading with a head-turning market cap of more than $15 billion.

"A strong public-market showing by Chewy will be a positive due to the increased asset coverage it implies and the possibility that some of those assets will be monetized and used to pay down debt in the future", said Ben Briggs, a high yield and distressed credit analyst with INTL FCStone.

The offering was led by Morgan Stanley, JPMorgan Chase & Co. and Allen & Co.

-With assistance from Emma Chandra and Matthew Monks.

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