Specialty dog treats and toys are worth more than we thought. Last week, subscription box startup BarkBox filed for an initial public offering through a merger with a special purpose acquisition company (SPAC), Northern Star Acquisitions Corp. According to BarkBox’s announcement, the transaction values the company at $1.6 billion, and the IPO is expected to raise $454 million in gross cash proceeds. BarkBox will use the money to accelerate its new and existing product lines and to expand internationally. BarkBox will be listed on the New York Stock Exchange under the ticker symbol BARK.

Current BARK shareholders and management will retain 100% of their equity in the new combined company. The boards of directors at both organizations have unanimously approved the merger, which is expected to close in the second quarter of next year. The company is projecting the following results:

• Project revenue of $365 million, gross profit of approximately $221 million, and gross margins of approximately 60% for fiscal year ending March 31, 2021.
• A 179% year-over-year increase in revenue from new product lines in the first half of fiscal year 2021.
• The company estimates net revenue CAGR for FY2020-FY2023 of more than 40%.

Founded in 2012 by Matt Meeker, Henrik Werdelin and Carly Strife, the dog-centric BarkBox features three monthly subscription box options: BarkBox, Super Chewer and BARK Bright Dental. The BarkBox and Super Chewer subscription boxes have more than 1 million subscribers. The subscription boxes feature monthly themes (e.g., Peanuts, Dogsgiving, Lick or Treat, Home Alone, etc.) to amuse pet owners and pets alike. BarkBox products are also available on Amazon, and at more than 23,000 retail stores including Target, Petco, PetSmart and Costco.

Once the transaction is complete, Meeker, Werdelin and Strife will continue in their current roles at BarkBox:

• Meeker – serve as executive chairman
• Werdelin – lead design, content and product development
• Strife – lead strategic BARK initiatives like BARK Eats

Bark CEO Manish Joneja will serve as the CEO of the combined company of the subscription box company once the merger is complete.

“We are thrilled to partner with Northern Star as we enter our next phase of growth. We started BARK because we are obsessed with making dogs and the people who love them happy. As a result of this merger, we will accelerate our ability to scale the BARK platform worldwide, add joy to the millions of dogs and families who love our products through our monthly subscription service and grow our omni-channel distribution,” said Meeker.

“We are energized by the numerous growth opportunities ahead, which include expanding our product offerings and experiences, enhancing our robust customer engagement platform though the use of artificial intelligence and creating lasting memories for dog lovers,” Meeker added.

Werdelin also commented on the deal.

“BARK is well positioned to be a category leader across the four primary channels for dogs: Fun, Food, Home and Health. We provide our loyal customers with a range of high-quality, tailored offerings, from toys, treats and personalized food blends to beds, collars and dental solutions, and are excited to launch new verticals and experiences that will continue to delight our dogs and their families. Additionally, partnering with legendary media and technology executive Joanna Coles will be invaluable as we continue our journey,” Werdelin said.

Insider Take

BarkBox is the latest company to use a SPAC to launch its IPO and, for BarkBox, there couldn’t be a better time. Because of COVID, millions of American consumers are buying their pet supplies online, including everything from food, treats and toys to litter, clothing and grooming supplies. Subscription boxes have also gained in popularity this year, because people don’t want to do non-essential shopping in retail stores. BarkBox hits the right mix – it offers affordable subscription options for different types of dogs and dog needs with high quality, pet tested treats and toys. With the pandemic continuing, BarkBox is in a good position to expand their product line and international reach because the popularity of online shopping and subscription boxes will continue to increase in 2021.