US pet care service Wag Labs going public in SPAC merger
Updated
Dog walking service Wag Labs plans to go public this year through a $350m merger with a blank cheque company.
San Francisco, California-based Wag Labs – aka Wag! – announced Thursday it will combine with CHW Acquisition (CHW). Select pet caregivers will receive shares in the combined company upon completion of the merger, the firms said Thursday in a news release.
The merger plan comes amid a proliferation of so-called pandemic puppies – dogs that were adopted or bred – during the Covid-19 outbreak. More than 23 million US households – one in five – adopted a pet during the pandemic, according to the American Society for the Prevention of Cruelty to Animals.
Services available in 50 states
Founded in 2015, Wag helps pet owners avoid the stress of leaving their faithful companions unattended. The company operates an app that enables customers to access dog walking, pet sitting, veterinary care, training, and other services in 50 American states.
The combined company is expected to be named Wag! Group and is expected to be listed on the Nasdaq exchange under the new ticker symbol “PET.”
“Our announcement today represents a significant milestone in our journey to build the leading premium wellness and services platform for pets,” said Wag CEO Garrett Smallwood in the news release. “We are transforming the fragmented and largely offline pet wellness and services industries through our vertically integrated mobile-first technology platform.”
Blank cheque firms, also known as special purpose acquisition companies (SPACs) are shells that exist solely for the purpose of acquiring, or merging with, private companies and taking them public.
“We are confident in Wag’s ability to accelerate its momentum by executing against its proven growth strategies and consolidating this attractive market,” said CHW co-CEO Jonah Raskas in the news release. CHW raised $125m last August on its IPO.
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Revenue of $42m expected
According to the news release, approximately 70% of US households own pets. Wag expects to generate $42m in revenue in 2022, a 120% year-over-year increase. Wag’s platform has over 350,000 approved pet caregivers across the US, has completed over 11 million services through the platform, and has delivered over $300m total bookings to date.
The transaction is expected to generate $175m in gross cash proceeds, assuming there are no share redemptions. Wag and CHW expect to meet the minimum cash condition through debt and equity financing commitments. New financing is being provided through current Wag and CHW shareholders at a price of $10 per share.
Wag’s and CHW’s backers include Battery Ventures, Acme Capital, General Catalyst and Tenaya Capital. CHW has also obtained $30m in debt financing from Blue Torch Capital.
Wag’s plan to go public comes after another dog-walking company, Rover Group, went public through a SPAC merger last summer. Rover’s stock has fallen about 37% since then and was down more than 6% on Thursday.
On Tuesday, pet health and wellness company Petco (WOOF) expanded its partnership with Rover (ROVR). Petco customers and members of the company’s Vital Care offering, which includes vet exams and grooming sessions, will have access to such Rover.com services as dog walking, boarding, house sitting, doggy day-care and drop-in-visits.
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