Chewy, Inc. Announces Public Offering of Class A Common Stock by Selling Stockholder and Concurrent Share Repurchase

Rhea-AI Summary

Chewy (NYSE: CHWY) announced a public offering of $500 million worth of Class A common stock by Buddy Chester Sub , an entity affiliated with BC Partners, Chewy's largest shareholder. The selling stockholder will grant underwriters a 30-day option for an additional $75 million in shares.

Concurrent with the offering, Chewy will repurchase $50 million of Class A Common Stock from the selling stockholder at the same price paid by underwriters. This repurchase is separate from Chewy's existing $500 million share repurchase program and will result in cancelled and retired shares. Barclays is acting as the sole underwriter for the offering.

Positive

• Concurrent $50M share repurchase will reduce share count
• Existing $500M share repurchase program remains unaffected
• Company maintains strong partnership with 3,500 trusted brands
• Extensive product portfolio of 115,000 offerings

Negative

• Large $500M stock offering by major shareholder could pressure stock price
• Additional $75M share option could further increase selling pressure
• Major shareholder (BC Partners) reducing stake signals potential confidence concerns

Insights

Financial Analyst

This secondary offering of $500 million worth of shares by BC Partners represents a significant ownership reduction in Chewy. The concurrent $50 million share repurchase by Chewy demonstrates strategic capital allocation, effectively reducing the share count and potentially supporting the stock price. This transaction structure allows BC Partners to reduce their position while Chewy maintains its separate $500 million buyback program intact.

The offering's impact on Chewy's stock price could be temporarily negative due to increased supply, but the company's fundamentals remain unchanged as no new shares are being issued. The repurchase component, while modest at 10% of the offering size, signals management's confidence in the company's valuation and helps offset some dilution impact.

Market Research Analyst

The timing and structure of this transaction provide interesting market dynamics. BC Partners' decision to reduce their position could signal their portfolio rebalancing needs rather than concerns about Chewy's prospects. The $75 million overallotment option gives flexibility to meet additional demand, suggesting confidence in market appetite for Chewy shares.

The independent committee approval for the repurchase adds credibility to the transaction's fairness. With Chewy's substantial market cap of $12.8 billion, this offering represents approximately 3.9% of the company's value, a manageable size that shouldn't significantly impact long-term trading dynamics.

PLANTATION, Fla.--(BUSINESS WIRE)-- Chewy, Inc. (NYSE: CHWY) (“Chewy”), a trusted destination for pet parents and partners everywhere, announced today the commencement of an underwritten public offering of $500 million of shares of its Class A common stock, par value $0.01 per share (the “Class A Common Stock”), by Buddy Chester Sub LLC (the “Selling Stockholder”), which is an entity affiliated with funds advised by BC Partners Advisors LP (“BC Partners”), Chewy’s largest shareholder (the “Offering”). The Selling Stockholder intends to grant the underwriters a 30-day option to purchase up to an additional $75 million of shares of Class A Common Stock. Chewy will not sell any shares of its Class A Common Stock in the Offering and will not receive any proceeds from the sale of the shares of Class A Common Stock being offered by the Selling Stockholder. The Offering is subject to market and other conditions, and there can be no assurance as to whether or when the Offering may be completed.

In addition, Chewy has agreed to purchase from the Selling Stockholder $50 million of Class A Common Stock at a price per share equal to the per share purchase price to be paid by the underwriters in the Offering specified above (the “Concurrent Repurchase”). The Concurrent Repurchase was approved by a special committee of Chewy’s Board of Directors, consisting solely of independent and disinterested directors not affiliated with BC Partners. The repurchased shares will be cancelled and retired upon completion of the Concurrent Repurchase. The Concurrent Repurchase is being executed separately from the Company’s existing $500 million share repurchase program authorized on May 24, 2024, which will be unaffected by this transaction. The Concurrent Repurchase is expected to be consummated concurrently with the Offering. The Offering is not conditioned upon the closing of the Concurrent Repurchase, but the Concurrent Repurchase is conditioned upon the closing of the Offering.

Barclays is acting as the sole underwriter for the Offering. Chewy has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (the “SEC”) for the Offering. A preliminary prospectus supplement and accompanying prospectus relating to the Offering will be filed with the SEC and will be available on the SEC’s website. Before you invest, you should read the preliminary prospectus supplement and accompanying prospectus and other documents Chewy has filed with the SEC for more complete information about Chewy and the Offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, Chewy or Barclays will arrange to send you the preliminary prospectus supplement and accompanying prospectus relating to the Offering if you contact Barclays: Barclays Capital Inc., c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, NY 11717 (or by email at barclaysprospectus@broadridge.com or telephone at 1-888-603-5847).

This press release shall not constitute an offer to sell, a solicitation to buy or an offer to purchase or sell any securities, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

About Chewy

Our mission is to be the most trusted and convenient destination for pet parents and partners everywhere. We believe that we are the preeminent online source for pet products, supplies and prescriptions as a result of our broad selection of high-quality products and services, which we offer at competitive prices and deliver with an exceptional level of care and a personal touch to build brand loyalty and drive repeat purchasing. We seek to continually develop innovative ways for our customers to engage with us, as our websites and mobile applications allow our pet parents to manage their pets’ health, wellness, and merchandise needs, while enabling them to conveniently shop for our products. We partner with approximately 3,500 of the best and most trusted brands in the pet industry, and we create and offer our own private brands. Through our websites and mobile applications, we offer our customers approximately 115,000 products and services offerings, to bring what we believe is a high-bar, customer-centric experience to our customers.

Forward-Looking Statements

This communication contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995 (“PSLRA”), and such statements are intended to qualify for the protection of the safe harbor provided by the PSLRA. All statements other than statements of historical facts contained in this communication are forward-looking statements, which involve substantial risks and uncertainties. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” or “would,” or the negative of these words or other similar terms or expressions. Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could cause actual results to differ materially from those in such forward-looking statements, including, but not limited to our ability to close the Offering and Concurrent Repurchase and complete any repurchases under our share repurchase program following the Offering and Concurrent Repurchase. You should not rely on forward-looking statements as predictions of future events, and you should understand that these statements are not guarantees of performance or results, and our actual results could differ materially from those expressed in the forward-looking statements due to a variety of factors. We have based the forward-looking statements contained in this communication primarily on our current assumptions, expectations and projections about future events and trends that we believe may affect our business, financial condition, and results of operations. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described in the section titled “Risk Factors” in our Quarterly Report on Form 10-Q for the quarterly period ended April 28, 2024, the preliminary prospectus supplement and accompanying prospectus and elsewhere in our filings with the SEC. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this communication. The results, events and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements. The forward-looking statements made in this communication relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this communication to reflect events or circumstances after the date of this communication or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241211404156/en/

Investor Contact:

ir@chewy.com

Media Contact:

Diane Pelkey

dpelkey@chewy.com

Source: Chewy

FAQ

What is the size of Chewy's (CHWY) latest stock offering?

The stock offering amounts to $500 million of Class A common stock, with an additional 30-day option for $75 million in shares.

How much stock is Chewy (CHWY) repurchasing alongside the offering?

Chewy is repurchasing $50 million of Class A Common Stock from the selling stockholder at the same price paid by underwriters.

Who is selling shares in Chewy's (CHWY) stock offering?

Buddy Chester Sub , an entity affiliated with BC Partners (Chewy's largest shareholder), is the selling stockholder in this offering.

Will Chewy (CHWY) receive any proceeds from this stock offering?

No, Chewy will not receive any proceeds from the offering as it is a secondary offering by an existing shareholder.

How does this offering affect Chewy's (CHWY) existing share repurchase program?

The concurrent $50M repurchase is separate from and does not affect Chewy's existing $500M share repurchase program authorized on May 24, 2024.