Amer Sports (AS) priced its IPO at $13.00 – $3.00 below its $16.00-to-$18.00 range – and increased the deal’s size to 105.0 million shares – up from 100.0 million in the prospectus. The IPO raised $1.37 billion ($1,365.0 million) on Wednesday night, Jan. 31, 2024. Amer Sports is the parent of three big iconic brands, including Wilson tennis rackets, Arc’teryx ski jackets and Salomon running shoes. Insiders, including China’s ANTA Sports Limited, bought $783 million of stock in the IPO – up from $510 million, their combined indications in the prospectus.
Shares of Amer Sports rose 3.1 percent to close at $13.40, up 40 cents from their IPO price, in their debut today (Thursday, Feb. 1, 2024) on the New York Stock Exchange. Volume was about 18.5 million shares. The stock ended the day where it started. Amer Sports shares began trading at about 12:56 p.m. EST today at $13.40, up 40 cents. Opening volume was about 2.5 million shares. During afternoon trading, Amer Sports’ stock hit a session high at $13.80.
This is the first IPO of February 2024. It’s the second billion-dollar IPO to debut in three weeks, following Kazakhstan’s mobile money app Kaspi.KZ (KSPI) on NASDAQ on Jan. 19, 2024. BrightSpring Health Services (BTSG), which made its NASDAQ debut on Jan. 26, 2024, raised $693.33 million in its IPO – and another $400 million in a concurrent offering of Tangible Equity Units (mandatory convertible preferred securities) – for total proceeds of $1.09 billion. BrightSpring Health, like Amer Sports, also priced its IPO at $13.00. In BrightSpring’s case, the IPO price was a discount of $2.00 below the bottom of its proposed range of $15.00 to $18.00.
Goldman Sachs, BofA Securities, J.P. Morgan, Morgan Stanley, Citigroup and UBS Investment Bank were the joint book-runners.
The below-range pricing at $13.00 gave Amer Sports a valuation of about $6.37 billion – down sharply from the projected market cap of about $8.24 billion, if the IPO had been priced at the $17.00 mid-point of the price range in the prospectus.
The IPO faced some hurdles during the roadshow as potential investors expressed concerns about Amer Sports’ valuation, its high debt load, its lack of profitability and its reliance on China’s consumers amid slower growth in that country’s economy.
Amer Sports intends to use most of the IPO’s proceeds to repay some debt, according to the prospectus. At Sept. 30, 2023, the company’s long-term debt included $4 billion in loans from related parties (principal shareholders), according to an SEC filing.
The company’s Cayman Islands parent issued the stock in the IPO The operating business, founded in 1950, is based in Helsinki, Finland.
Courting China
The IPO marks Amer Sports’ return to the public markets. But it is coming back to the public realm as a consumer goods company transformed by its courtship of China.
Amer Sports was delisted in 2019 from the NASDAQ Helsinki exchange after it was acquired by a consortium of investors led by China’s Anta Sports Limited in a transaction valued at about $5.2 billion at the time. The investors’ consortium included FountainVest Partners; China’s Tencent Holdings Ltd. and Anamered Investments, the investment company owned by Chip Wilson, the billionaire founder of yoga apparel company Lululemon Athletica.
The 2019 transaction was “part of an effort to bring high-end athletic equipment to China’s increasingly wealthy middle class,” Bloomberg reported.
Stepping Up to the Plate
Three principal shareholders – ANTA Sports Limited, which is China’s largest athletic apparel company, as well as Chip Wilson’s Anamered Investments and China’s Tencent Holdings – supported Amer Sports’ IPO as cornerstone investors. They bought a combined $783 million of stock – up from their original indications for an aggregate of up to $510 million. Through their affiliated funds and investment vehicles, the cornerstone investors increased their indications by 21 million shares at pricing.
The cornerstone investors’ shares are subject to a 180-day lock-up agreement, the prospectus says.
Brands and the Bottom Line
Amer Sports, Inc. is the parent of three iconic brands in the specialty areas of outdoors apparel and equipment, technical performance (athletic equipment and gear) and racquet and ball sports: Arc’teryx, known for its ski jackets in light high-tech performance materials; Salomon, known for its skis, hiking boots, running shoes and other outdoor gear, and Wilson Sporting Goods, known for its tennis rackets as well as for its tennis balls, which are used in the U.S. Open. Amer Sports’ other brands include Atomic skis and helmets as well as Louisville Slugger baseball bats and gloves.
The company’s brands have loyal followings. But that did not translate to the bottom line recently. Amer Sports reported a net loss of $262.5 million on revenue of about $4.25 billion for the 12 months that ended Sept. 30, 2023, according to financial statements in the prospectus.
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