The IPO Buzz: Barbecue, Drugs, Bullets and Bikini Wax

Weber, Inc. (WEBR), the iconic grill brand, priced its IPO tonight at $14 – below its $15-to-$17 range – on 17.86 million shares – to raise $250 million. The pricing terms represented a cut of 67 percent in the deal’s size. Weber was the only household name on this week’s slim IPO Calendar – and the talk about its sizable IPO had run as hot and cold as a fledgling barbecue cook’s attempt to get the fire and the diablo sauce just right.  Meanwhile, drugs accounted for half of the week’s eight deals, while a bullets manufacturer and a bikini wax franchiser rounded out the list. (More on that in just a moment.) Another IPO – a vitamin and health supplements company – was postponed last night, just ahead of its expected pricing; The Better Being Company (BBCO proposed) IPO had been scheduled to start trading today (Wednesday, Aug. 4, 2021).

Bankers were aiming to raise about $2.9 billion from the seven remaining deals, as of Wednesday night. After two deals were postponed “due to market conditions” on Thursday morning, the week’s estimated IPO proceeds were trimmed to about $1.6 billion. (That total figure for estimated proceeds does not include the amount raised by a handful of SPACs and a tiny NYSE uplift deal that were priced this week.)

European Wax Center, Inc. (EWCZ) grabbed the door prize for the first traditional IPO priced this week. The franchisor of hair-removal salons priced its IPO tonight (Wednesday, Aug. 4) of 10.6 million shares at $17 – above the mid-point of its $15-to-$18 range. The stock opened Thursday at $19 – up $2 from its IPO price – and ended its first day of trading on the NASDAQ at $21.39, up 25.82 percent. (For those who may be curious, a bikini wax costs up to $42, while a Brazilian wax costs up to $59, according to the website of a European Wax Center salon in Plano, Texas, where the newly public company is headquartered.)

Morgan Stanley, BofA Securities and Jefferies were the joint book-runners of the European Wax Center IPO.

Dueling Grill Brands

Weber (WEBR) attracted a lot of attention with its IPO plans in July. Its founder, George Stephen, Sr., invented the original charcoal grill in 1952. This brand is known for quality.

“I’d be lost without my Weber grill,” one Wall Street pro says.

IPO professionals initially picked the Weber IPO as “the deal of the week” because of the brand’s name recognition and the successful IPO last week of Traeger (COOK), a wood pellet grill with a cult following.

But the word on the Street was that enthusiasm for the deal began to cool somewhat about a day ahead of its pricing. Some traders even wondered out loud today: “Do we really need two grill brands going public in a row?”

The answer to that question came soon enough. The IPO was cut sharply at pricing, a result that The Wall Street Journal called “disappointing.”

The prospectus for Weber’s IPO called for 46.9 million shares to be sold $15 to $17. The IPO’s proceeds had been estimated at $750 million, if the deal had been priced at the $16 mid-point of its range.

Goldman Sachs, BofA Securities, J.P. Morgan, BMO Capital Markets, Citigroup, UBS Investment Bank, Wells Fargo Securities and KeyBanc Capital Markets are the joint book-runners for Weber’s IPO.

On Thursday, Weber’s stock opened at $17 – up from its $14 IPO price – and closed its first day of trading at $16.50, up 17.86 percent.

Testing Drugs, Minting Money

Four IPOs in various areas of the pharmaceuticals business are in the offing this week.

WCG Clinical (WCGC proposed), which provides software and other clinical trial support services to biopharmaceutical companies, academic institutions and contract research organizations, postponed its IPO on Thursday morning, Aug. 5th, the day that its stock was expected to start trading on the NASDAQ. The IPO’s terms were 45 million shares at $15 to $17, according to the prospectus.

Goldman Sachs, Morgan Stanley, BofA Securities/ Barclays/ Jefferies, William Blair, BMO Capital Markets, UBS Investment Bank, SVB Leerink and HSBC were the joint book-runners of the IPO.

WCG Clinical says its services help drug companies control the cost and streamline the efficiency of setting up clinical trials, which can speed up the process of getting new drugs to market.

Three of this week’s four drug-centered IPOs were scheduled to price Thursday night and start trading on Friday, Aug. 6:

Healthcare Royalty, Inc. (HCRX proposed), a company that specializes in mid-sized acquisitions of drug royalty payments. This IPO of 46.9 million shares at $15 to $17 is being managed by joint book-runners Goldman Sachs, Citigroup, Credit Suisse, Jefferies, Cowen and SVB Leerink.

Adagio Therapeutics (ADGI proposed), a clinical-stage biopharmaceutical company that is evaluating an antibody to treat and prevent COVID-19 and coronavirus variants. This IPO of 17.7 million shares at $16 to $18 is being managed by joint book-runners Morgan Stanley, Jefferies, Stifel and Guggenheim Securities.

Eliem Therapeutics (ELYM proposed), a clinical-stage biopharmaceutical company that is evaluating two leading drug candidates – one drug candidate to treat the chronic pain of diabetic peripheral neuropathy and sciatica – and another drug candidate to treat major depression, peri-menopausal depression and focal-onset seizures, the most common type of seizures experienced by people with photosensitive epilepsy. This IPO of only 4.5 million shares at $17 to $19 is being managed by joint book-runners SVB Leerink, Evercore ISI, Stifel and Guggenheim Securities.

Adagio Therapeutics upsized its IPO at pricing on Thursday night, Aug. 5th, to 18.2 million shares, up from 17.7 million in the prospectus, and priced the IPO at $17 – the mid-point of its $16-to-$18 range.

Shares of Adagio Therapeutics jumped to $21 – up $4 or 23.52 percent from their $17 IPO price – when they started trading Friday morning on the NASDAQ.

Healthcare Royalty postponed its IPO indefinitely “due to market conditions” on Friday morning, Aug. 6, 2021, the day that its stock was expected to start trading on the NASDAQ. 

The word was out on Wall Street that Eliem Therapeutics may get priced Friday morning, but some IPO experts were noting that the pricing was now “day by day.”

Body Armor and Ammo

Cadre Holdings (CDRE proposed), the parent of the Safariland brand of bullet-proof vests, ammunition, holsters and other law enforcement gear,  postponed its IPO “due to market conditions” on Thursday morning, Aug. 5th, the day that its stock was expected to start trading on the New York Stock Exchange. The IPO’s terms were 7.1 million shares at $16 to $19, according to the prospectus.

State and local police departments, firefighters, EMTs and corrections departments (jails and prisons) are Cadre’s clients, along with federal agencies, including the U.S. State Department, the U.S. Justice Department and the U.S. Department of Homeland Security.

Stifel, Raymond James, Truist Securities and Stephens, Inc. were the joint book-runners of Cadre’s IPO.

Bank On It

A small bank offering – an uplift to the NASDAQ from the OTC – was priced Wednesday night. Orange County Bancorp (OBT) upsized its IPO to 1 million shares, up from 900,000 shares, and priced the stock at $33.50, the mid-point of its $32-to-$35 range.

Piper Sandler and Stephens, Inc., were the joint book-runners.

Bank sector investors played this deal, of course, although other IPO investors also hoped to get some stock.

Shares of Orange County Bancorp opened Thursday at $33.80 and ended their first day of trading on NASDAQ at $34.10, up 1.79 percent from their $33.50 IPO price.

Second Week of August

Just two deals have been scheduled for the week of Aug. 9, 2021, and both are from small banking companies. The second week of August is the time when the IPO market usually begins to slow down. (August 2020 was a notable exception to that rule.) So far this week, it looks like IPO bankers may be getting ready to take a break after a scorching July.

Stay tuned.

(Editor’s Note: The column was updated Friday morning with the Adagio Therapeutics pricing and the postponement of Healthcare Royalty. On Thursday morning, the column was updated with the postponement of two IPOs – WCG Clinical (WCGC proposed) and Cadre Holdings (CDRE proposed) –  and the pricing Wednesday night of the Orange County Bancorp (OBT) IPO.)

(For more information, please check the IPO Calendar and click on a company’s name, which will take you to the IPO Profile and a link to the prospectus.)

(Never trade on proposed symbols. You might wind up owning something on the OTC Bulletin Board.)

Disclosure: Nobody on the staff has a position in any stocks mentioned above, nor do they trade or invest in IPOs. The staff does not issue advice, recommendations or opinions.

Disclaimer: A SCOOP Rating (Wall Street Consensus of Opening-day Premiums), is a general consensus taken, at press time, from Wall Street and investment professionals concerning how well an IPO might perform when it starts trading. The SCOOP Rating does not reflect the opinions of anyone associated with The SCOOP ratings should not be taken as investment advice. The rating merely reflects the opinion of the professionals at the time of publication and is subject to last-minute changes due to market conditions, changes in a specific offering and other factors, such as changes in the proposed offering terms and the shifting of investor interest in the IPO. The information offered is taken from sources we believe to be reliable, but we cannot guarantee the accuracy.