Amer Sports, the maker of the world-renowned Wilson tennis rackets, returned to public markets in a tepid debut on Thursday after selling shares at a discounted price in its U.S. IPO for a valuation of $6.3 billion.
After a two-year dry spell, initial public offerings in the United States are expected to rebound in 2024 on firming bets of a soft landing for the U.S. economy. But the recovery has been uneven so far.
Amer Sports, which owns a slate of iconic sports brands like Arc’teryx and Salomon, sold 105 million shares priced at $13 each to raise $1.37 billion on Wednesday. It had earlier targeted a range of $16 to $18.
The stock began trading at $13.4 apiece, up 3.1% from the IPO price, giving it a valuation of $6.5 billion.
While the valuation at which it went public was of interest to Amer Sports, “it was more important for us to free up capital and strengthen our balance sheet,” said Chief Financial Officer Andrew Page.
“At the end of the day, we really believe in the long-term value that we are going to create for our existing and new shareholders,” Page added.
The debut marks the second major test of investor appetite for specialty retail stocks in the last few months after luxury sandal maker Birkenstock’s disappointing debut late last year.
China jitters
China’s Anta Sports acquired Amer Sports in a deal that valued it at more than $5 billion in 2019. But the China link could also be weighing on investor sentiment.
“Potential shareholders seem uneasy about Amer Sports’ growth opportunities being overly affected by its reliance on demand from China and therefore may want to discount its valuation,” said Michael Ashley Schulman, partner and chief investment officer at Running Point Capital Advisors.
The company generated 19.4% of its sales in China in the first nine months of 2023, up from 8.3% in 2022, its IPO prospectus showed.
Amer Sports also said it has key suppliers and manufacturing facilities in China, and warned that escalating trade tensions could lead to future tariffs or other curbs on its ability to sell goods in the United States that it makes or sources in China.
“There are questions regarding whether they can maintain their pace of growth across developed and emerging markets. The summer 2024 Olympics in Paris may help raise excitement,” Schulman added.
Founded in 1950 by four student organizations in Finland, Amer Sports started as a tobacco company before expanding into shipping more than a decade later.
To specialize in sports, Amer retreated from the tobacco business in 2004. Its brands also include Arc’teryx, Salomon, Atomic and Peak Performance.
Amer has a storied history in the world of sports and has etched its name next to legendary athletes, including the likes of tennis legend Roger Federer and marathon runner Courtney Dauwalter.
CEO Jie Zheng said the IPO would help the company expand the footprint of its major brands.
Reuters