We just don't see a world in which Blue Apron can compete long-term against traditional restaurants, delivery, and an Amazon-powered Whole Foods.
— Jason Clampet
Meal-kit delivery company Blue Apron Holdings Inc. plans to raise as much as $586.5 million in its initial public offering to help it compete in the increasingly crowded marketplace for on-demand food.
The company will market 30 million shares at $15 to $17 each, Blue Apron said in a regulatory filing on Monday. The sale can be increased to 34.5 million shares if there’s enough demand, which would boost the IPO to $586.5 million, according to the filing.
Blue Apron filed for the IPO on June 1 without disclosing the size of the sale, after reportedly delaying listing preparations while it worked to improve financials. While revenue more than doubled last year, Blue Apron is still losing money as it fights to win customers from competitors.
Founded in 2012 in Long Island City, Queens, Blue Apron sends weekly boxes of pre-portioned ingredients with instructions for customers to cook meals at home. Rival Sun Basket, which recently sold a stake to Unilever’s venture arm, hired Bank of America Corp. and Jefferies Group LLC to lead its own IPO.
Blue Apron’s listing is being lead by Goldman Sachs Group Inc., Morgan Stanley, Citigroup Inc. and Barclays Plc
Standing out among its competitors in the busy U.S. food-delivery market can be expensive: Blue Apron spent $144 million on marketing last year, or about 17 percent of its total operational spending, according to the earlier filing. The industry got even more crowded on Friday, when Amazon.com Inc. announced a deal to buy grocer Whole Foods Market Inc. for $13.7 billion. As well as winning customers from meal-kit companies like HelloFresh AG and Sun Basket, Blue Apron must also face up to publicly listed giants like Amazon.
Instacart Inc., which had long pitched its online grocery delivery service to supermarket chains as a way to fight against the world’s biggest online retailer, has an exclusive partnership to deliver Whole Foods perishables. Instacart believes Amazon’s purchase won’t affect the arrangement, according to a person familiar with the arrangement who asked not to be identified because the details are private.
Blue Apron is touting its brand as well as what it labels “superior products at compelling value” as it seeks to differentiate itself, according to the IPO prospectus. The company is aiming to add new customers for its standard boxes, as well as broadening its portfolio to cater to a wider range of diets.
©2017 Bloomberg L.P.