Contact: Tejas Venkatesh
In a strong debut, digital coupon vendor RetailMeNot leaped onto the public markets today, creating $1.4bn in market value. After pricing at $21 each, shares shot up more than 30% to change hands at $27.60 by midmorning.
RetailMeNot’s rapid top-line growth contributed to its warm reception on Wall Street. The company increased revenue from $17m in 2010 to $155m for the year ended March 31, while running solidly in the black throughout.
The market currently values RetailMeNot at $1.4bn, or 9x trailing sales. That’s a premium valuation compared with M&A activity in the sector. For instance, we estimate that Slickdeals was valued at 4.6x trailing sales in its sale to Warburg Pincus in January. RetailMeNot itself was valued at 5.6x trailing sales in its $159m sale to WhaleShark Media in 2010, after which the acquirer took on the name of the target. Morgan Stanley, Goldman Sachs and Credit Suisse were lead bookrunners for the offering.
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