Birkenstock Holding Plc’s highly anticipated initial public offering (IPO) is set to price at the end of the trading day, marking the last of four significant listings that are viewed as indicators of the current state of US equity markets.
The German company, synonymous with its iconic broad-strapped leather sandals, is expected to finalize its IPO pricing at the upper end of the $44 to $49 per-share range. According to insiders familiar with the matter, who have requested anonymity due to the confidential nature of discussions.
Birkenstock and private equity owner L Catterton aim to sell around 32 million shares, with the goal of raising up to $1.58 billion. At the price of $49 per share, this would value the company at approximately $9.2 billion.
This IPO comes less than a month after the UK chip designer Arm Holdings Plc, supported by SoftBank Group Corp., raised $5.23 billion in the largest listing of the year. Grocery delivery startup Instacart raised $660 million in its IPO, and marketing and data automation provider Klaviyo Inc. raised $576 million, ending nearly a two-year US listing drought.
However, market conditions have grown more uncertain since then. Of the three companies that led the way in September, Instacart, the sole consumer-focused firm among them, saw its stock drop by 12% from its IPO price.
Birkenstock’s IPO comes with both promise and caution. In 2021, two shoemakers went public with varying outcomes. The Zurich-based manufacturer of On Running shoes, which only became profitable last year, saw its shares rise by 8.8% since the IPO. Conversely, Allbirds Inc.’s shares, originally priced at $15 in its IPO, now trade at about 97 cents, and the company continues to report growing losses.
Birkenstock has an advantage over these peers due to its robust profitability, according to Bloomberg Intelligence analyst Abigail Gilmartin. She anticipates that Birkenstock will perform quite well when it begins trading, setting the stage for other profitable companies to follow suit.
Birkenstock’s IPO could mark the final major US listing this year, partly due to concerns that a government shutdown would leave the US Securities and Exchange Commission understaffed to manage filings. The decisions of numerous potential listing candidates, spanning diverse sectors from activewear to pharmaceuticals, will depend on Birkenstock’s debut, with many likely considering IPOs early next year.
Birkenstock, with a history dating back nearly 250 years, has established a strong presence in the US since 1966. Its sandals enjoy cross-generational appeal, with baby boomers and millennials contributing almost equally to its 2022 sales. The brand has ventured into high fashion, collaborating with luxury names such as Dior, Manolo Blahnik, and Valentino, and inspiring variations from labels like Celine and Givenchy.
The successful Barbie movie, featuring Margot Robbie in the title role wearing pink Birkenstock sandals, has further boosted the brand’s sales.
In a bid to stabilize its listing, the company is seeking anchor investors. Billionaire LVMH Chairman Bernard Arnault’s family holding company, which has already invested in Birkenstock, may purchase up to $325 million worth of shares. The Norwegian sovereign fund and Henry Ellenbogen’s Durable Capital Partners have also expressed interest in acquiring as much as $300 million in stock collectively, according to filings.
Of the shares in the listing, up to 8% have been reserved for employees at the IPO price.
The IPO involves the sale of 10.8 million shares by the company, while L Catterton is offering 21.5 million shares and will continue to own approximately 83% of the stock, retaining control of the company.
L Catterton stands to double its investment if the IPO proceeds as planned. The firm acquired Birkenstock for €4 billion ($4.2 billion) in a deal completed in April 2021, which also involved the Arnault company, although the deal value was not publicly disclosed.
Goldman Sachs Group Inc., JPMorgan Chase & Co., and Morgan Stanley are leading the offering. Birkenstock shares are set to commence trading on the New York Stock Exchange under the symbol BIRK.
