The IPO Buzz: Birkenstock (BIRK) Prices IPO at $46 – Just Below Mid-Point – To Raise $1.5 Billion

Birkenstock Holding plc (BIRK) priced its IPO at $46.00 – just below its $46.50 mid-point – on 32.26 million shares – the same number in the prospectus – to raise $1.5 billion, the company said tonight. The IPO’s price range was $44.00 to $49.00. The profitable Birkenstock Holding is the British parent of the iconic German sandal company, whose design heritage goes back to 1774. Birkenstock’s initial public offering is the third-largest U.S. IPO this year – ranking behind Arm Holdings plc (ARM) at about $4.9 billion in September and J&J spinoff Kenvue (KVUE) at $3.8 billion in May. (This column, published Tuesday night, was updated Wednesday afternoon with Birkenstock’s trading debut on the NYSE.)

Birkenstock’s shares fell 10.9 percent to open at $41.00 – down $5.00 from their $46.00 IPO price – in their New York Stock Exchange trading debut at about 1:33 p.m. EDT today (Wednesday, Oct. 11, 2023). The stock was trading at $41.38 on volume of around 8.5 million shares at around 2:20 p.m. EDT today.  Birkenstock shares slid 12.6 percent to close today at $40.20, down $5.80 from their IPO price, on their first day of NYSE trading. At the closing bell, volume was 15.7 million shares.

Bloomberg called Birkenstock’s opening “the worst opening for a listing of $1 billion or more in New York in over two years, according to data compiled by Bloomberg.” 

Goldman Sachs, J.P. Morgan and Morgan Stanley led the joint book-runners’ team, which included BofA Securities, Citigroup, Evercore ISI, Jefferies, UBS Investment Bank, BNP PARIBAS, Bernstein and HSBC.

Birkenstock’s IPO attracted a lot of attention because of the company’s strong profits and its big brand name. Its pricey sandals and clogs are known for their cork and latex footbeds, which mold to the foot and offer arch support. Birkenstock got some fresh fashion buzz ahead of the IPO from its cameo in this summer’s blockbuster “Barbie” movie.

Seasoned IPO investors reacted positively to the $46.00 IPO price on Tuesday night. They seemed relieved that the IPO was not priced at the high end of $49.00, which the bankers had considered, according to a Reuters story on Sunday (Oct. 8, 2023).

The $46.00 IPO price gave Birkenstock a valuation of about $8.64 billion. That’s slightly less than twice what private equity firm L Catterton paid for Birkenstock in 2021: 4 billion euros – about $4.35 billion at the time, according to Reuters. Including debt, the price tag was about $4.8 billion.

L Catterton is a luxury goods-focused private equity firm backed by LVMH, the parent of  Dior and Louis Vuitton couture, Moet and Chandon Champagne, and jewelers Bulgari and Tiffany & Co. In January 2016, Bernard Arnault, the chairman and CEO of LVMH, struck a deal with Catterton, the U.S.-based private equity company, to form L Catterton, according to WWD (Women’s Wear Daily).

Of the 32.26 million shares in the IPO, the company was offering 10.75 million shares and the selling shareholder, private equity firm L Catterton, was offering 21.51 million shares.

Birkenstock expects to receive gross proceeds of about $494.5 million. The company plans to use the IPO proceeds to pay off some debt. Birkenstock will not receive any proceeds from the sale of the selling stockholder’s shares.

Financière Agache, the family office of LVMH CEO Bernaud Arnault, along with cornerstone investors Durable Capital Partners and Norges Bank Investment Management, indicated interest in buying an aggregate of up to $625 million – or nearly 42 percent – of the stock in the IPO. That amounts to about 13.59 million shares at the $46.00 IPO price. The shares purchased by Financière Agache and the cornerstone investors will not be subject to the lock-up agreement, the prospectus says.

The same provision – no lock-up agreement for cornerstone investors’ shares – also was in the prospectus for Oddity Tech (ODD), the Israeli digital beauty brand’s IPO. Private equity firm L Catterton was a selling shareholder in Oddity Tech’s IPO in July. Goldman Sachs, Morgan Stanley and Allen & Company ran the joint book-runners’ team of eight investment banks.

For the 12 months that ended March 31, 2023, Birkenstock reported net income of $165.42 million on revenue of $1.45 billion. 


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