By Ciara Linnane, MarketWatch
Beyond Meat Inc., the company created by vegan Ethan Brown in 2009, raised nearly a quarter of a billion dollars to grow its line of plant-based meats, with shares rocketing in their public debut.
The maker of the Beyond Burger, which is sold at Whole Foods and restaurant chain TGIF, among others, priced its initial public offering at $25 a share Wednesday evening, raising at least $240 million at a valuation slightly shy of $1.5 billion.
Beyond Meat /zigman2/quotes/211617595/composite BYND +3.37% priced the IPO at the top of a range that it had already increased during the process. The company said in a regulatory filing Tuesday that it planned to offer 9.5 million shares priced at $23 to $25 each, updating the original plan to offer 8.75 million shares priced at $19 to $21 each. In the end, it sold 9.63 million shares, with underwriters holding the option to sell another 1.44 million shares in case of over-allotment. The stock began trading Thursday on the Nasdaq exchange under the ticker symbol “BYND.”
The first trade for the stock was $46 at $12:18 p.m. Eastern on Thursday, which was 84% above the IPO price. It extended gains to close its first day at $65.75, or 163% above its IPO price, making it the best performing first-day IPO in nearly two decades.
Goldman Sachs, JPMorgan and Credit Suisse are lead underwriters on the deal, with BofA Merrill Lynch, Jefferies and William Blair acting as co-managers. The company also makes plant-based pork and poultry products.
Proceeds of the deal will be used to expand current manufacturing facilities and open new ones, to finance research and development and to boost sales and marketing, along with the catchall “general corporate purposes,” according to the prospectus.
“As a young adult, I enjoyed a career in clean energy but continued to wrestle with a question born of these early days: do we need animals to produce meat?” asks Brown, who is chief executive as well as founder of Beyond Meat, in a letter included in the prospectus.
The letter explains how Brown set out to understand the history of human consumption of meat, acknowledging that it helped spur the increase in brain size that allowed our ancestors to become hunters, not scavengers, and led to the development of agriculture.
But the toll taken on human health, the environment, natural resources and animal welfare is a high one, he says, listing as examples of unintended consequences such illnesses as cancer, heart disease and diabetes.
“Livestock emerged as a major contributor of greenhouse gas emissions, with related burdens on land, energy, and water,” says the letter.
Brown argues that humans do not need to fully abandon meat, but to change the definition to one that considers composition and structure — amino acids, lipids, trace minerals, vitamins and water.
Those core elements are not exclusive to animals, but exist in the plant kingdom too, he says.
“The animal serves as a bioreactor, consuming vegetation and water and using their digestive and muscular system to organize these inputs into what has traditionally been called meat,” he writes
“At Beyond Meat, we take these constituent parts directly from plants, and together with water, organize them following the basic architecture of animal-based meat. We bypass the animal, agriculture’s greatest bottleneck.”
Beyond Meat’s /zigman2/quotes/211617595/composite BYND +3.37% strategy is to place its products in the meat case at its grocery partners with the aim of persuading meat lovers to try it out. The company does not try to market to vegans and vegetarians, who account for less than 5% of the U.S. population. The Beyond Burger is now available at about 11,000 of its 17,000 grocery-store customers in the U.S., says the prospectus.
It is also available at Canadian fast-food restaurant chain A&W.