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2017-06-19 21:06:03
Blue Apron Pursues I.P.O. as Amazon Looms Over Industry

Even as Amazon’s $13.4 billion bid for Whole Foods threatens to shake up food retailing, Blue Apron, a New York-based meal-delivery service, is setting its sights on a stock market debut.

The service has begun pitching an initial public offering to raise as much as $586.5 million, joining a growing number of consumer-focused start-ups considering the public markets.

Yet its prospective investors are aware that Blue Apron is doing so as Amazon, the colossus of e-commerce, may be changing the nature of food shopping altogether. Analysts have speculated endlessly about what Amazon’s founder, Jeff Bezos, intends to do should he complete the blockbuster deal for Whole Foods.

Amazon, they note, has already dabbled in experiments, including drive-through grocery stores and high-tech stores with no cashiers. Combining its e-commerce knowledge with Whole Foods’ wares would be a no-brainer, these analysts suggest.

Shares of other grocery chains plunged after Amazon’s bid for Whole Foods was announced Friday, and analysts speculated about what that union would mean for food-delivery start-ups like Instacart. Shares of Kroger tumbled 9 percent Friday, although they recovered 1.6 percent Monday.

Whole Foods shares, meanwhile, continued to rise Monday and closed at $43.22 — more than Amazon’s cash offer of $42 a share, suggesting investors are optimistic that a higher bid may yet emerge.

Other big retailers have bought or invested in internet start-ups to bolster their e-commerce capabilities. Walmart recently agreed to buy Bonobos, a men’s clothing company, for $310 million, and Target led a $170 million investment into Casper, a maker of mattresses and other sleep products.

Blue Apron also faces meal-kit competition from HelloFresh, Sun Basket and Purple Carrot.

Such companies were founded on the premise that customers want fresh ingredients and the convenience of home delivery with the satisfaction of actually preparing their meals at home.

Blue Apron is likely to argue to prospective investors that its niche in the food-delivery service is significantly different from the more general service that Amazon offers through PrimeFresh.

Founded in 2012, Blue Apron is well known among the cognoscenti of podcasts and other media popular with millennials.

That popularity has been a result of aggressive marketing. Blue Apron’s marketing expense is enormous, and it has been growing, jumping tenfold from 2014 to 2016, to $144.1 million.

Now the company is hoping to capitalize on its growth by pursuing an initial public offering. It is taking that step with the public markets appearing more welcoming to debutantes: The number of offerings tripled, to 25, in the first quarter of this year from the same time last year. Such offerings raised nearly $10 billion in proceeds in the quarter.

Among those offerings was one by Snap, the parent of Snapchat and the most recent prominent consumer-focused company to go public, in March.

In an amended prospectus on Monday, Blue Apron said it planned to price its shares between $15 and $17. At the midpoint of that range, the company would be valued at roughly $3 billion; at the high end, it would be valued at $3.2 billion.

The company plans to sell at least 30 million shares, although underwriters can sell an additional 4.5 million shares if demand is strong enough.

Since its inception, Blue Apron has posted significant gains in sales, with its revenue in 2016 more than doubling from the previous year, to $795.4 million. But it has continued to lose money — $54.9 million last year — as it has spent on marketing and growth.

Its offering is being led by Goldman Sachs, Morgan Stanley, Citigroup and Barclays. The company plans to list on the New York Stock Exchange under the ticker symbol APRN.