Amer Sports' China reliance weighs on 2024's first big IPO -sources (updated)
31/01/2024 18:12
(Adds latest pricing deliberations, paragraph 5)
By Echo Wang
NEW YORK, Jan 31 (Reuters) - Amer Sports' AS.N growing
reliance on China for revenue is weighing on investor interest
in the sporting equipment maker's U.S. initial public offering
(IPO), which had sought to raise up to $1.8 billion, people
involved in the process said.
The company behind Arc'teryx outdoor apparel, Salomon
sporting goods and Wilson tennis gear generated 19.4% of its
sales in China in the first nine months of 2023, up from 8.3% in
2022, its IPO prospectus shows.
Amer Sports represents a major test for the U.S. IPO market
after a sizeable but smaller company, BrightSpring Health
Services BTSG.O , priced its $633 million offering last week
below its indicated range. Shares in BrightSpring, which is
owned by private equity firm KKR KKR.N , have since been
trading below their discounted IPO price.
Meanwhile, social media platform Reddit is planning to list
in New York in March, Reuters reported last week, in one of
2024's most-anticipated listings.
While the Amer Sports IPO is not in jeopardy, the softening
in investor demand has led it to consider a price of $13 per
share, below its $16 to $18 per share indicated range, the
sources said, cautioning that no decision has been taken.
At that price, Amer Sports would be worth 6.3 billion and
the IPO would raise $1.3 billion.
Amer Sports did not respond to a request for comment.
The IPO prospectus shows most of its sales come from the
Americas and Europe, and while revenue in these regions has been
growing, sales in China were up by 68% in the first nine months
of 2023 compared to the corresponding period in 2022.
The sources, who requested anonymity, said on Wednesday that
despite this some potential investors are concerned about Amer
Sports' fortunes being intertwined with China's economy.
A property crisis and a local government debt crunch has
driven many investors to reduce their exposure to China.
Amer Sports has also warned in its IPO prospectus that
escalating trade tensions could in the future lead to tariffs or
other curbs on its ability to sell goods in the U.S. that it
makes or sources in China.
Bloomberg News reported earlier on Wednesday that the IPO
price that Amer Sports was considering was $13 per share.
The IPO is scheduled to price on Wednesday evening, with the
shares debuting on the New York Stock Exchange on Thursday.
Founded in Helsinki in 1950, Amer Sports was acquired by a
consortium of primarily Chinese firms in 2019 for 4.6 billion
euros ($5 billion). Anta Sports, a Chinese athletic clothing
manufacturer with aspirations to take on Western rivals such as
Nike NKE.N and Adidas ADSGn.DE , holds a 56% stake.
Under Anta's ownership, Amer Sports' ties to China have
grown. The company says in its IPO prospectus it now has key
suppliers and manufacturing facilities in China, and that about
33% of its products sourced from third-party suppliers were
manufactured in the country in 2022.
Some of the investors have also expressed concerns that the
company's Salomon and Wilson brands are showing lower margins
and slower growth than Arc'teryx, the sources said. While
Arc'teryx sales rose 65% in the first nine months of 2023,
Salomon and Wilson sales rose 35% and 10%, respectively.
(Reporting by Echo Wang in New York; Editing by Greg
Roumeliotis, Lincoln Feast and Alexander Smith)
((Greg.Roumeliotis@thomsonreuters.com; +1 646 223 6022; Reuters
Messaging: greg.roumeliotis.thomsonreuters.com@reuters.net))