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Levi Strauss’ IPO Will Give It Much Needed Money For Expansion

Levi Strauss’ IPO Will Give It Much Needed Money For Expansion
The pioneer and inventor of blue jeans, Levi Strauss & Co is returning to the United States stock market after about three decades through its launch of its IPO and the company is expecting to generate about $587 million through sale of shares. If that amount of money is generated by the company, it would put a market value of $6.17 billion for the company and would also give it access to a huge cache of cash which it says would use to increase its product range.
The company said that it anticipates to offer 36.7 million shares priced between $14 and $16 per share in an initial public offering. It has a total of 385.5 million shares outstanding.
“The valuation is fair and as expected. It is also a good time for Levi’s to go public due to the resurgence of 80s’ blue jeans fashion,” said Eric Schiffer, chief executive officer of California-based private equity firm Patriarch Organization.
While he is more interested in investing in shares of new ventures, Schiffer said that he was looking forward to purchasing some shares of Levi’s when the company issues the IPO.
There is a growing demand for denims globally because of the creation of new styles such as high-waist and pinstriped jeans. Driven by robust denim sales, strong results were reported last week by some of the smaller rivals of Levis’ such as American Eagle Outfitters and Abercrombie & Fitch.
Levi’s, which is now 165-years old, has set itself a strategy of transforming itself into a complete lifestyle company and become a global leader in that segment. It wants to cater to demands of both men and women.
The company has also drawn up some innovative methods to attract the younger customer base through the expansion of its tailor shop and print bar which are systems developed by the company to allow consumers to customize and create their own designs for the branded jeans and T-shirts of the company. 
In 2018, annual net revenue of $5.6 billion was reported by Levi Strauss. The company is also in the business of selling footwear, belts and wallets.
According to the company filing, about 80 percent of voting control in the company after the IPO would be retained by the Hass family - the current descendants of founder Levi Strauss - the Hass family.
Levi Strauss is among a number of high profile companies to be issuing IPOs this year. Names that list includes names such as  ride-hailing companies Uber Technologies and Lyft, photo-posting app Pinterest and home-renting service provider Airbnb.
Schiffer said that because of the frequently changing trends in the fashion industry, Levi Strauss is viewed to be a more of a short-term play by investors unlike some of the tech unicorns such as Uber and Airbnb.
According to the filing, Levi Strauss intends to list as “LEVI” on the New York Stock Exchange. The money generated from the IPO is planned to be used for financing future deals aimed with increasing its portfolio of brands. However there are no immediate plans for any acquisitions.

Christopher J. Mitchell

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