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Dutch Bros to seek $3.3 billion valuation in IPO, which would mint a new Oregon billionaire

UPDATED: Tue., Sept. 7, 2021

An employee works at Dutch Bros Coffee on July 22 in Portland.  (Mark Graves)
An employee works at Dutch Bros Coffee on July 22 in Portland. (Mark Graves)
By Mike Rogoway The Oregonian

PORTLAND – Dutch Bros hopes to raise up to $484 million in its initial public offering, according to a new regulatory filing Tuesday, which would make it the largest IPO in Oregon history – and the first to raise more than $100 million in 14 years.

The company, based in Grants Pass, said Tuesday it plans to sell shares for between $18 and $20 apiece.

That would value the business at up to $3.3 billion, making it Oregon’s seventh-most-valuable public company – ahead of NW Natural, Greenbrier and Schnitzer Steel. Dutch Bros, which intends to trade on the New York Stock Exchange under the ticker symbol “BROS,” indicated last month it planned to raise $100 million.

The IPO would also mint a new Oregon billionaire, with Dutch Bros chairman and co-founder Travis Boersma holding a stake worth as much as $1.43 billion, according to details disclosed for the first time in Tuesday’s filing.

Boersma would also control nearly three-quarters of all the voting shares in the company through a multitiered stock structure. Dutch Bros said Tuesday that its charter will contain provisions that will make it difficult for an outside investor to mount a hostile takeover of the business.

Dutch Bros said it plans to use proceeds from the stock offering to pay off nearly $200 million in debt. TSG Consumer Partners, an investment firm that bought a stake in Dutch Bros three years ago, would own about one-third of the company’s stock after the IPO.

Dutch Bros did not say when it plans to go public but did say Tuesday that it plans to begin pitching the company to prospective Wall Street investors. That suggests the stock offering is proceeding apace.

Travis Boersma and his brother Dane started their chain of drive-thru coffee kiosks with a single pushcart in 1992. The business had 471 locations across the West at the end of June, stretching from Washington to Texas.

Dane Boersma died in 2009 of amyotrophic lateral sclerosis, Lou Gehrig’s disease. Travis Boersma still lives in Grants Pass.

Dutch Bros (pronounced “bros,” not “brothers”) has aggressive expansion plans, hoping eventually to grow to as many as 4,000 coffee stands. The company said Tuesday it plans a new coffee roasting facility in the Midwest to accommodate continued growth.

The southern Oregon chain has distinguished itself in a competitive coffee market by emphasizing friendly, prompt customer service. Dutch Bros encourages its “broistas” to greet customers in line in their cars and take their orders there so their coffee is ready when they reach the kiosk window.

Rather than focus on gourmet coffee of the kind that roasters in the Portland area feature, Dutch Bros has a menu filled with cold brews, frothy coffee shakes, energy drinks and other treats.

Though Oregon’s economy was thriving in the years leading up to the COVID-19 pandemic, the state hasn’t produced a new, homegrown company in decades. Much of Oregon’s business landscape consists of large employers, like Intel, Boeing, U.S. Bank, Adidas and Daimler, that are based elsewhere but have large outposts in the Portland area.

Dutch Bros bucks that trend, growing rapidly from its headquarters in southern Oregon and demonstrating that the state can still produce large businesses.

As Dutch Bros expands, however, it will face growing competition – along with the challenges of managing a public company. The business warned investors last month of a “material weakness” in its financial reporting, an accounting lapse Dutch Bros attributed to lacking the necessary expertise to track the company’s complicated financial transactions.

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