Online grocer Webvan, which currently serves only the San Francisco Bay Area and is planning to spend more than $1 billion on expansion, announced the terms of its initial public offering on Wednesday. Webvan plans to offer 25 million shares at a price range of $11 to $13 in October, meaning it will raise $325 million if it prices the IPO at the top of its range.
More than 317 million shares will be outstanding after the IPO. At $13 a share, those shares are worth more than $4.1 billion. Webvan’s biggest shareholder is its CEO, Louis Borders of Borders Books fame. The CEO’s stake should be worth more than $1 billion on IPO day. That’s about 10 times what competing online grocer Peapod (Nasdaq: PPOD) is worth. Shares of Peapod closed down 5/32 to 6-5/16 on Wednesday.
Webvan’s valuation seems a bit hard to swallow, but the company will have seven underwriters unloading shares to its customers. Most IPOs usually have just three or four underwriters. Obviously, this IPO is a bit bigger than most offerings. Webvan’s underwriters are Goldman Sachs, Donaldson Lufkin & Jenrette, Merrill Lynch, BancBoston Robertson Stephens, Bear Stearns, Deutsche Banc Alex. Brown and Thomas Weisel Partners.