Weber, a leading outdoor grilling brand, saw its stock jump 30% after major shareholder BDT Capital Partners, the Chicago-based investment firm and merchant bank founded and led by Byron Trott, offered to buy the remainder of shares it doesn’t already own. According to a 13D filing the company has a stake of 88.9% in WEBR and offers $6.25/share in cash which represents a 24% premium to Weber’s closing price on Monday. Well down from the August 2021 IPO price of $14 in very short order.
Earnings have been hammered with inflation eroding consumers’ purchasing power, a disrupted supply chain environment. Since 2010, it’s been majority owned by BDT Capital Partners.
Stock Market Reaction
- WEBR trades $6.55 +1.52 (+30.22%) today after bid
- WEBR -10.58 (-61.76%) the past year
Weber since its IPO has seen multiple flameouts. CEO Chris Scherzinger departed, downbeat earnings, dividend suspension, and workforce reductions.
Inflation eroded consumers’ purchasing power, shoppers frequenting retailers less often and are likely reducing the frequency at which they upgrade their grill. Meanwhile globally the US dollar is hurting, which broke parity with the Euro, hit all-time highs against the pound, 32-year highs against the Yen and 14-year highs against the yuan. The Weber grill got more expensive very fast. The heightened volatility led to management withdrawing net sales and EBITDA outlooks.
WEBR is also facing include “substantial” freight cost increases. The disrupted supply chain environment was a primary factor in its collapse in EBITDA yr/yr. During the company’s Q2 earnings call in mid-May, it expected pricing actions implemented last year, which were fully accepted, would help gross margins improve over the next “several quarters.” What happened was WEBR reached a tipping point where higher prices are starting to deter possible buyers and the stock collapsed.
WEBR suspended its quarterly dividend, which produced an annual yield of around 2.7%. That caused more sellers, and short sellers. It was reported the stock had a 46% short position on it when the takeover was announced Monday.
Competing grill maker Trager (COOK), which sells wood-fired grills, signaled that the grilling industry was struggling with its planned workforce reductions announced last earnings. Both WEBR and COOK have relatively high short interests of 46% and 12%, respectively, highlighting the market’s negative sentiment toward grill makers.
BBQGuys got even later than WEBR to the party. The e-commerce platform for grills backed by retired American football stars Eli and Peyton Manning, agreed to go public through blank-check firm Velocity Acquisition Corp. in a transaction that valued the combined entity at $963 million. BVG as of writing has yet to exit any of its investments; plans to take BBQGuys public via SPAC were scrapped late last year due to supply chain issues and broad market conditions.
Weber IPO Recap
Weber, a leading outdoor grilling brand showed that timing is everything in an IPO, particularly in a niche market. Weber Inc. reinforced those limits, in this case the limits of barbecue grill makers going public. Weber fared worse in its IPO than Rival Traeger Inc. (COOK), which raised $424 million in its listing in July.
Weber’s shares listed on the NYSE under the symbol WEBR and began trading Thursday August 5, 2021, on the New York Stock Exchange under the symbol WEBR. Weber cut the size of its initial public offering by more than half and priced it below a marketed range to raise $250 million. The company sold slightly less than 18 million shares for $14 each. Weber had marketed almost 47 million shares for $15 to $17, which would have raised as much as $797 million. The company offered 29 million fewer shares than anticipated.
Goldman Sachs, BofA Securities, J.P. Morgan, BMO Capital Markets, Citi, UBS Investment Bank, Wells Fargo Securities, and KeyBanc Capital Markets acted as joint bookrunners on the deal.
The company had a market value of less than $4 billion based on the outstanding shares listed in its filings with the U.S. Securities and Exchange Commission.
Trott and BDT Capital Partners, as well as Weber’s management, are listed in the filing as being among its biggest shareholders. The company plans to use the IPO proceeds to buy back shares from its holding company and from some existing shareholders.
Heading into the IPO Weber reported $963 million in sales in the six months through March 2021, a jump of more than 60% from the same period last year. Its net income rose to $73.8 million from $23.6 million over the same period.
Weber is a Palatine, Illinois-based company that launched its first grill in 1952. Since 2010, it’s been majority owned by BDT Capital Partners, the Chicago-based investment firm and merchant bank founded and led by Byron Trott.
Weber states that it is the leading outdoor cooking company, with a 20%+ share of the US and global outdoor cooking markets in 2020. The company’s product portfolio includes traditional charcoal grills, gas grills, smokers, pellet and electric grills, and recently its Weber Connect technology-enabled grills. Weber is the leader in the largest markets in outdoor cooking, and beyond these markets, estimates that it has either the number one or number two brand position in each of the key geographies it serves.
Source: WEBR, SEC
From The TradrsCommunity News Desk