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‘Bro’ Coffee Chain, Federer-Backed Shoe Maker Set To Debut After Pricing High

New IPO stocks Dutch Bros (BROS), a drive-thru coffee chain, and running-shoe maker On Holding (ONON) were set to debut on Wednesday after pricing above their expected range.




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The stocks will trade on the New York Stock Exchange under the tickers “BROS” and “ONON,” respectively. Both were indicated higher, but had not yet opened as of midday Wednesday.

In tapping the public markets to broaden their appeal, both IPO stocks would be competing against larger publicly traded rivals, after the coronavirus pandemic upended both of their industries.

Dutch Bros on Tuesday said it priced its IPO at $23 per share, above an expected price range of $18-$20. The company offered 21,052,632 shares, raising more than $484 million in the process.

The pricing valued the company at around $3.8 billion. BofA Securities, J.P. Morgan Securities and Jefferies were acting as lead book-running managers.

Dutch Bros, which began as a double-head espresso machine in 1992, has since expanded into more than 470 shops, and other cold coffee beverages, across 11 states, largely in the western half of the U.S. The drive-thru chain — which calls its baristas “broistas” and offers a more casual alternative to a world of pretense-heavy cafes — also has a “secret menu,” similar to West-Coast burger chain In-N-Out.

Sales at Dutch Bros jumped 37% last year to $327.4 million. The company lost 38 cents per share over that time, but adjusted EBITDA swelled 43% to $69.76 million.

During the first half of this year, sales stood around $228 million, a 51% gain from the period a year ago. Dutch Bros’ per-share loss over that period was 32 cents per share. Adjusted EBITDA grew 29% to $45.83 million.

Those gains have come even as the coronavirus pandemic keeps people working from their homes. Dutch Bros also noted that wildfires last year in many western states kept people indoors.

IPO Stocks, Competition

Both IPO stocks are up against hefty competition.

Dutch Bros will debut as a number of larger publicly traded names — like Starbucks (SBUX), McDonald’s (MCD) and Dunkin’ — that compete intensely for daily commuters’ coffee.

On Holding, meanwhile, debuts after more people took up outdoor sports and other activities during the pandemic. But it will go up against the likes of Nike (NKE) and Adidas (ADDYY). On, which also sells apparel, also considers companies like Lululemon (LULU) to be competitors.

On Holding on Tuesday priced its IPO of 31.1 million shares at $24 apiece. That was above an expected range of $20-$22.

The Swiss running-shoe maker — whose investors include tennis icon Roger Federer — raised more than $746 million in the offering, with a valuation of around $6.5 billion.

Goldman Sachs, Morgan Stanley and JPMorgan are acting as joint lead book-running managers for the offering.

On Holding logged net sales of around $463 million last year, a 59% gain. For the first six months of this year, those sales jumped 85% to $343.4 million. On Holding lost money, on a per-share basis, but turned a per-share profit of one cent during the first half of this year.

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