Loose lips delay Webvan IPO
FOSTER CITY, Calif. -- Webvan Group Inc., an Internet grocery company that had been planning to carry out a massive initial public offering this week, said it will delay the financing in response to concerns raised by the Securities and Exchange Commission.
The SEC's gripes are twofold, according to people familiar with the agency's thinking. First, the regulatory agency is concerned that Webvan officials have made themselves available to reporters for BusinessWeek and Forbes magazines recently, despite securities regulations requiring companies to undergo a "quiet period" when preparing an IPO. BusinessWeek last month featured Webvan's chairman, Louis Borders, on the cover of an issue featuring the top 25 personalities of the Internet economy.
Second, the SEC is concerned that Webvan, in its road-show presentations to institutional investors, has been sharing detailed information about its business results this summer. Such information isn't published in the company's prospectus. The new statistics shared on the road show are widely regarded as bullish for Webvan, according to people who have heard the presentations. Details of the road show were disseminated Wednesday by Adam Lashinsky, a columnist for TheStreet.com Inc., an online business-news service.
Cooling-off period
Neither Webvan nor the SEC would say how long the cooling-off period would last. But people familiar with the negotiations said the company's IPO might be delayed by at least a week or two. They also said Webvan is likely to file an amended registration statement, which will make the road-show data available to all investors.
Webvan has said it plans to sell 25 million shares to the public, priced between $11 and $13 a share. The company currently has about 290 million shares outstanding. If the offering is completed as planned, it would value the entire company at about $4 billion. That's a remarkable amount for a company that only began delivering groceries last May and had less than $400,000 of sales in 1999's first half.
But people who have heard Webvan's road-show presentation say the company last month was making about 1,500 deliveries a day, with an average value of about $80 apiece. That would translate to daily revenue of $120,000 -- or monthly revenue approaching $3 million. Analysts who have examined Webvan's business model are projecting that the company could book $120 million in revenue next year and more than $500 million the year after.