Amer Sports, the Finland-based sporting goods company known for brands like Wilson, Arc’teryx, and Salomon, completed its initial public offering (IPO) on the New York Stock Exchange on February 1st, 2024. However, the company was forced to price its shares below its targeted range due to concerns over its reliance on sales in China.
IPO Priced at $13 Per Share, Below $14-$16 Range
The maker of Wilson tennis rackets and Louisville Slugger bats sold 67 million shares at $13 each, raising $1.37 billion in the offering. This was below the company’s expected price range of $14 to $16 per share.
At the IPO price, Amer Sports is valued at around $6.5 billion. The stock began trading on February 1st under the ticker “AME” and closed its first day up 3% at $13.40 per share.
Amer Sports IPO Details
| IPO Share Price | $13 |
|---|---|
| Shares Offered | 67 million |
| Total Raised | $1.37 billion |
| Valuation | $6.5 billion |
| First Day Close | $13.40 (+3%) |
Concerns Over Reliance on Chinese Market
Amer Sports generates around 30% of its $3.7 billion in annual revenue from China. With tensions simmering between China and the West, investors worried about the implications for the company if relations deteriorated further.
As one analyst noted, “The China overhang was real for this deal. With almost a third of sales coming from there, investors needed a larger discount to participate.”
This led the company and its underwriters to price the offering below expectations in order to ensure it would be fully subscribed. However, with the shares still trading up on their first day, it suggests demand remains healthy for consumer brand companies with exposure to Chinese consumers.
Long Journey Back to Public Markets
The IPO marks a return to the public markets for Amer Sports after nearly two decades as a privately held company. Chinese apparel brand Anta Sports acquired Amer Sports in 2019 for €4.6 billion and took it private.
However, Anta struggled with the high debt levels needed to finance the acquisition. Last year, Anta sold a 30% stake in Amer Sports to a consortium of investors led by Canadian billionaire Chip Wilson, founder of Lululemon athleisure brand.
As part of that deal, Wilson and the other investors pushed for an IPO to help pay down debt and unlock shareholder value. Amer Sports is now one of Wilson’s largest investments alongside his stakes in Lululemon and luxury ski maker Azterra.
Outlook Remains Strong Despite China Concerns
While the China reliance may have dented enthusiasm for the IPO, Amer Sports’ underlying business remains strong. The company has a portfolio of iconic sporting goods brands with loyal customer bases across North America, Europe, and Asia-Pacific.
In 2023, Amer Sports delivered record sales of $3.7 billion, up 12% over the prior year excluding currency impacts. Its largest brand, Wilson, enjoyed 24% growth thanks to surging demand for tennis equipment during the COVID-19 pandemic.
With secular trends around health, fitness, and outdoor recreation expected to continue, most analysts are bullish on Amer Sports’ prospects over the next 3-5 years. Mizuho Securities started coverage with a “Buy” rating and $17 price target, representing 30% upside from the IPO pricing.
Final Thoughts
While the Amer Sports IPO demanded a discount to get done, companies focused on the “consumerization of sports” remain attractive, says William Blair. For investors who got shares at the IPO price, the 3% first day pop is a good start. But the real returns will come as Amer Sports delivers on the operating potential of its brand portfolio.
With its return to the public equity markets, all eyes will be on management to keep growing sales and expanding margins. This will determine whether Amer Sports’ next chapter is a winner like Wilson’s tennis rackets or a disappointment like some recent IPOs. For now, the company is off to a solid start, but the game is only just beginning.
To err is human, but AI does it too. Whilst factual data is used in the production of these articles, the content is written entirely by AI. Double check any facts you intend to rely on with another source.
