GrubHub raises its IPO price range to $23-$25 a share

GrubHub could now raise as much as $176 million at a $1.9 billion valuation

Financial trends and news by Steven Loeb
April 1, 2014
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Looks like GrubHub is getting more attention from investors than it thought. A lot more! And now the company is upping its game accordingly, looking to raise almost double the amount it originally proposed in its IPO!

The food delivery company has raised the price range for its upcoming initial public offering, according to an updated S-1 filing with the Securities and Exchange Commission on Tuesday. GrubHub has now set the price at between $23 to $25 per share.

The new price will value the company at $1.9 billion, and allow it to raise $170 million at the midpoint range, up from the original $100 million that was proposed in the company’s original S-1 filing in February

It is also an increase from just last week, when GrubHub priced its shares between $20 and $22 for a potential $148 million raise and a $1.7 billion valuation. 

The increased interest from investors could be due to GrubHub's impressive growth, especially on mobile. 

In its S-1, the company revealed that it generated revenue of $137.1 million in 2013, an increase of 67% from 2012. That growth, it said, was driven by "increasing adoption of our platform by restaurants and diners." The company had 3.4 million Active Diners as of December 31, 2013.

GrubHub also benefited from its merger with Seamless in May of last year. That brought the company $26.3 million in more revenue and 1.9 million in Active Diners.

In all, it sees $1.3 billion in "combined Gross Food Sales" on its platform, with roughly 28,800 restaurants across 600 cities in the United States. It is currently seeing 135,000 combined daily orders, on average.

The company also noted a significant increase in mobile orders in the past year, going from 20% in the last quarter of 2011 to 43% in the last quarter of 2013.

Citigroup and Morgan Stanley will act as joint book-running managers for the proposed offering.

GrubHub had initially filed confidentially, taking advantage of a provision in the Jumpstart Our Business Startup (JOBS) Act last year that allows companies to file to go public without letting anyone know about it. 

Only companies with less than $1 billion in revenue can file this way. The JOBS Act loosened regulations for what it called "emerging growth companies," which only applies to companies that make that much in revenue.

According to the bill, companies are allowed to file for an IPO confidentially, meaning that they do not have to disclose anything about the company until 21 days before the start of its road show, where it will have to market itself to investors, if the company ever even decides to have one.

This is the method that Twitter used for its IPO last year, and the same one that Box ireportedly using as well. The point being that it allows companies to test the waters, and see how the market is shaping up, without any extra scrutiny from the public. 

VatorNews has reached out to GrubHub for more information on the increased IPO price, and we will update if we learn more.

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