Blue Apron and Delivery Hero already had their work cut out for them, staging IPOs during a time when competition in the food-delivery market has devoured several startups already. That task became much more difficult Friday when Amazon said it would buy Whole Foods Markets for $13.7 billion.
Today, both companies priced their offerings, taking the next step toward their IPOs. Both have little other choice beyond withdrawing their offerings. The impact of Amazon buying Whole Foods remains uncertain for now, which leaves a window for them to enter the public market, although that window may soon slam shut.
Blue Apron updated its prospectus to price its IPO between $15 a share and $17 a share, raising proceeds as high as $510 million. Berlin-based Delivery Hero, meanwhile, plans to raise as much as €996 million ($1.1 billion) in an offering priced between €22 a share and €22.5 a share.
In its updated filing, Blue Apron added a line in its risk-factor section saying, “business combinations and consolidation in and across the industries in which we compete could further increase the competition we face and result in competitors with significantly greater resources and customer bases than us.”
Of the two companies, Delivery Hero has less to worry about for now because Whole Foods stores are primarily located in North America, with just nine in the United Kingdom. But Amazon tends to export its new business models abroad and could easily buy a grocery chain or restaurant-delivery company in Europe.
How these IPOs fare before and after their IPOs may have an impact on how other delivery startups receive funding. Instacart, which counts Whole Foods among its investors, faces an uncertain future. An Instacart spokesperson told TechCrunch Friday that, “Amazon just declared war on every supermarket and corner store in America.”
In light of that, the Whole Foods acquisition will be a central topic during the IPO roadshows with potential investors. Still, there are reasons to think companies like Instacart and Blue Apron may actually benefit in the short term. The war that Amazon has started will prompt retailers and restaurants to quickly come up with a strategy to compete against the ecommerce giant, which could trigger a wave of partnerships or even acquisitions of independent delivery startups.
Whatever the impact from Amazon buying Whole Foods has on the already competitive market of food delivery, it seems prudent for companies to raise money sooner rather than later.
Source: Venture Beat