Dutch Bros Inc. Announces Launch of Secondary Public Offering of Class A Common Stock
- None.
- Dutch Bros will not receive any proceeds from the sale of shares of Common Stock by the Selling Stockholders.
- One of the directors nominated by the Selling Stockholders is expected to resign from the Dutch Bros board of directors upon completion of the offering.
Insights
The announcement by Dutch Bros Inc. of a registered underwritten public offering of shares by existing stockholders is a significant event for current and potential investors. The decision by TSG Consumer Partners, L.P. to sell 8 million shares, with an option for the underwriter to purchase an additional 1.2 million, could suggest a realignment of the company's ownership structure. This move may lead to increased liquidity in the market for Dutch Bros' shares, potentially affecting the stock's volatility in the short term.
However, investors should note that Dutch Bros will not receive any proceeds from this transaction, which indicates that the capital structure of the company will remain unchanged. The costs associated with the sale, barring underwriting discounts and commissions, will be borne by Dutch Bros, which could marginally impact its financials. The resignation of a director nominated by the Selling Stockholders post-offering could also alter the dynamics within the board, possibly affecting corporate governance and strategic decisions going forward.
The secondary offering of Dutch Bros' shares by TSG Consumer Partners, L.P. might be interpreted by the market as a signal regarding the valuation or future prospects of the company. Such large transactions can influence investor sentiment and stock price, as market participants analyze the implications of a major shareholder reducing their stake. Additionally, the lock-up restrictions on the distributed in kind securities indicate a structured approach to managing the exit, which could be designed to minimize market disruption.
Furthermore, the designation rights alteration for board representation post-offering suggests a shift in influence among shareholders. This change may be closely monitored by investors as it could impact company policy and strategy. The involvement of Morgan Stanley as the sole underwriter adds credibility to the offering, which might reassure investors about the procedural integrity of the transaction.
The upcoming changes in board composition following the offering could have implications for Dutch Bros' governance. The reduction in the number of directors that the Selling Stockholders can nominate may lead to a shift in board dynamics. This shift could influence the company's strategic direction, oversight and risk management. Stakeholders should closely watch how the new board composition will address the company's long-term goals and whether it will bring fresh perspectives that could drive growth or improve operational efficiency.
It's also important to consider how the distribution in kind and subsequent lock-up restrictions reflect the Selling Stockholders' commitment to a measured divestment strategy. This approach can help maintain stability in the company's stock by preventing a sudden oversupply in the market. Investors often view such strategic planning positively, as it indicates a thoughtful consideration of the company's and shareholders' interests.
Substantially concurrently with the consummation of this offering, the Selling Stockholders expect to distribute in kind securities convertible into 389,823 shares of Common Stock (or 448,298 shares of Common Stock if the option to purchase additional shares is exercised in full) to certain of their indirect members who have elected to maintain their existing interests and to not participate in this offering. The shares distributed in kind will be subject to the lock-up restrictions described in the section titled “Underwriting” in the prospectus supplement. The offering is not conditioned upon the completion of distribution in kind.
Dutch Bros is not offering any shares of Common Stock in this offering and will not receive any proceeds from the sale of shares of Common Stock by the Selling Stockholders but will bear a portion of the costs associated with the sale of such shares, other than any underwriting discounts and commissions.
Upon completion of this offering, one of the directors nominated by the Selling Stockholders is expected to resign from the Dutch Bros board of directors, and pursuant to the stockholders agreement that Dutch Bros previously entered with the certain affiliates of our co-founder and the Selling Stockholders and Dutch Bros’ amended and restated certificate of incorporation, the Selling Stockholders will only have the right to designate one director to the Dutch Bros board of directors.
Morgan Stanley is acting as sole underwriter for the proposed offering.
A shelf registration statement on Form S-3 relating to Dutch Bros’ securities, including the Common Stock, has been filed with the SEC and became effective upon such filing. The proposed offering will be made only by means of a free writing prospectus, a prospectus supplement and an accompanying prospectus. Before you invest, you should read the prospectus supplement, the accompanying prospectus, the documents incorporated by reference therein and any other documents that Dutch Bros may file with the SEC for more complete information about Dutch Bros and the proposed offering. A copy of the prospectus supplement and the accompanying prospectus relating to the offering may be obtained, when available, by visiting the SEC’s website at www.sec.gov. Alternatively, copies of the prospectus supplement relating to the offering may be obtained, when available, by requesting it from: Morgan Stanley & Co. LLC, 180 Varick St., 2nd Floor,
This press release does not constitute an offer to sell or a solicitation of an offer to buy these securities, nor shall there be any offer or sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state or jurisdiction.
About Dutch Bros Inc.
Dutch Bros Inc. (NYSE: BROS) is a high growth operator and franchisor of drive-thru shops that focus on serving high QUALITY, hand-crafted beverages with unparalleled SPEED and superior SERVICE. Founded in 1992 by brothers Dane and Travis Boersma, Dutch Bros began with a double-head espresso machine and a pushcart in
Forward-Looking Statements
In addition to historical information, this release contains a number of “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, the intended size and terms of the proposed offering of shares of Common Stock by the Selling Stockholders. These statements are based on Dutch Bros’ current expectations and beliefs, as well as a number of assumptions concerning future events. When used in this press release, the words “intends,” “estimates,” “projected,” “expects,” “should,” “guidance,” and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements. Such forward-looking statements are subject to known and unknown risks, uncertainties, assumptions and other important factors, including many of which are outside Dutch Bros’ control that could cause actual results to differ materially from the results discussed in the forward-looking statements, including those related to market conditions, the size of the proposed secondary offering, termination of the proposed secondary offering before closing, the satisfaction of customary closing conditions related to the proposed secondary offering and those described under the heading “Risk Factors” in the registration statement on Form S-3 related to the shares of Common Stock filed with the SEC on September 6, 2023, in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 23, 2024 and in our future reports to be filed with the SEC. Forward-looking statements contained in this press release are made as of this date, and Dutch Bros undertakes no duty to update such information except as required under applicable law.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240321564234/en/
For Investor Relations inquiries:
Raphael Gross
ICR
(203) 682-8253
investors@dutchbros.com
For Media Relations inquiries:
Jessica Liddell
ICR
(203) 682-8208
jessica.liddell@icrinc.com
Source: Dutch Bros Inc.
FAQ
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