Roots Corporation has filed an amended and restated preliminary long-form prospectus in connection with its proposed initial public offering (IPO) by way of secondary offering.
Searchlight Capital Partners, L.P. and Don Michael Investments Inc., an entity indirectly controlled by Roots founders, Michael Budman and Don Green and certain of their family members, intends to sell 12,500,000 and 14,285,715 shares at an offering price between $14 and $16 per share for gross proceeds of $200 million.
Searchlight Capital Partners, L.P. and Don Michael Investments have granted underwriters an over-allotment option for additional 15% of the number of shares being offering for gross proceeds of $30 million.
Roots will not receive any proceeds from the offering.
Upon completion of the offering, Roots Corporation will have 41,980,500 shares and no preferred shares issued and outstanding, valuing the company at $629.7 million based on the midpoint of the estimated price range.
Based on the midpoint of the estimated price range, Searchlight Capital Partners will continue to control 22,674,395 Shares, representing approximately 54.0% of issued and outstanding Shares on a non-diluted basis, or 21,076,449 shares, representing approximately 50.2% of our issued and outstanding shares if the over-allotment option is exercised in full. Don Michael Investments will continue to own 5,705,030 shares (13.6%) on a non-diluted basis or 5,302,976 shares( 12.6%) if the over-allotment option is exercised in full.
The offering is being co-led by TD Securities Inc., Credit Suisse Securities (Canada), Inc. and BMO Capital Markets, together with Jefferies Securities, Inc., RBC Dominion Securities Inc. and Scotia Capital Inc., as joint bookrunners, and CIBC World Markets Inc., Canaccord Genuity Corp. and National Bank Financial Inc., as underwriters.
Torys LLP acts as legal counsel to Roots while Osler, Hoskin & Harcourt LLP acts on behalf of the underwriters.
Established in 1973, Roots is an iconic Canadian lifestyle brand with a rich heritage and portfolio of premium apparel, leather goods, accessories and footwear. It delivers products to customers through its store network, online platform and international partnerships. As of July 29, 2017, Roots integrated omni-channel footprint included 116 corporate retail stores in Canada, 4 corporate retail stores in the United States, 109 partner-operated stores in Taiwan, 27 partner-operated stores in China and a global e-commerce platform that shipped to 54 countries during our most recently completed fiscal year.
For 26 weeks ended July 29, 2017, Roots reported $106 million in sales, $57 million in gross profit and $8 million in net loss.
photo credit: Roots