Dutch Bros Inc. Announces Launch of Secondary Public Offering of Class A Common Stock
Dutch Bros announced the launch of a secondary public offering of 8,762,700 shares of Class A common stock by selling stockholders associated with TSG Consumer Partners. The company itself will not offer any shares and won't receive any proceeds. The offering is managed by BofA Securities and Jefferies. Post-offering, Sean Sullivan will resign from the board, and the selling stockholders will lose the right to designate a director. Additionally, Dutch Bros' Class C and D shares will undergo changes in voting power and conversion, respectively. The offering will be conducted under a shelf registration statement filed with the SEC.
- The offering is managed by reputable underwriters BofA Securities and Jefferies.
- Post-offering, the selling stockholders will no longer have the right to designate a director, potentially increasing board independence.
- Class C shares will have reduced voting power, and Class D shares will convert to Class A shares, simplifying the share structure.
- Dutch Bros will not receive any proceeds from the offering, missing out on potential capital infusion.
- The company will bear the costs associated with the sale of shares, excluding underwriting discounts and commissions.
- The market might perceive the resignation of Sean Sullivan, the remaining director nominated by the selling stockholders, as a loss of experienced leadership.
Insights
The announcement of a secondary public offering of Class A common stock by Dutch Bros Inc. has several implications for investors. Firstly, it is important to note that Dutch Bros will not receive any proceeds from this offering, as the shares are being sold by existing stockholders, specifically TSG Consumer Partners. This means there won't be an infusion of capital to support Dutch Bros' operations or growth initiatives. Instead, the offering primarily provides liquidity to TSG Consumer Partners.
Moreover, with the resignation of Sean Sullivan from the board of directors and the termination of the stockholders' agreement, Dutch Bros will likely experience changes in its governance structure. The reduction in voting power for Class C and D shares also signifies a shift in control, potentially leading to a more evenly distributed shareholder voting power.
Investors should consider the potential impact on stock price due to the increased supply of shares in the market. This can often result in downward pressure on the stock price, at least in the short term. Additionally, the absence of fresh funding might be seen as a missed opportunity for Dutch Bros to bolster its balance sheet, particularly in a competitive market environment.
The market dynamics surrounding this secondary offering are noteworthy. The involvement of BofA Securities and Jefferies as joint book-running managers ensures a level of confidence in the transaction's execution. However, the offering's success will depend heavily on market conditions and investor sentiment at the time of sale.
From a strategic standpoint, the exit of TSG Consumer Partners from their significant holdings could be interpreted as a sign of their confidence in having maximized their investment return. While this may raise questions about future growth prospects, it also opens up opportunities for new investors to enter the stock.
The lock-up restrictions on the distributed in-kind shares should help mitigate any immediate volatility from the additional shares entering the market. Nonetheless, investors should remain cautious about potential medium-term price fluctuations as these shares eventually become tradable.
Substantially concurrently with the consummation of this offering, the Selling Stockholders expect to distribute in kind securities convertible into 723,813 shares of Common Stock 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 the costs associated with the sale of such shares, other than any underwriting discounts and commissions.
Upon completion of this offering, Sean Sullivan, the remaining director 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 no longer have the right to designate a director to the Dutch Bros board of directors and the stockholders agreement will be terminated.
Additionally, upon completion of this offering, the aggregate number of outstanding shares of Dutch Bros’ Class C common stock and Class D common stock will collectively represent less than
BofA Securities and Jefferies are acting as joint book-running managers for the proposed offering. The underwriters may offer the shares of Common Stock from time to time for sale in one or more transactions on the New York Stock Exchange, in the over-the-counter market, through negotiated transactions or otherwise at market prices prevailing at the time of sale, at prices related to prevailing market prices, or at negotiated prices, subject to the underwriters’ right to reject any order in whole or in part.
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: BofA Securities, NC1-022-02-25, 201 North Tryon Street,
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 Quarterly Report on Form 10-Q for the three months ended March 31, 2024 filed with the SEC on May 8, 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.
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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
What is the size of Dutch Bros secondary public offering?
Will Dutch Bros receive any proceeds from the secondary offering?
Who are the underwriters for the Dutch Bros secondary offering?
What changes will occur to Dutch Bros' Class C and D shares post-offering?
What will happen to the board of directors after the offering?
Why are selling stockholders offering their shares?
