Online grocer Tal Depot plans to raise $15 million in one of the few initial public offerings staged by a Long Island company in the last decade.
The Cedarhurst company, with warehouse operations in Farmingdale, is seeking to sell 2.1 million shares at a price between $6 and $8, according to a government filing.
A successful IPO would put Tal Depot in a very small club. Only five companies have staged traditional IPOs on Long Island in the last decade, according to data from S&P Global Market Intelligence and Newsday research.
One of those, Altice USA, which owns 25 percent of Newsday, moved from Bethpage to Long Island City within months of its $2.2 billion IPO in June 2017. Another, Woodmere-based Infinity Oil & Gas Co., sold its assets in October 2013 and became a shell company whose stock listing was taken over by a San Diego biotechnology company, Ignyta Inc.
Meanwhile, Long Island’s roster of public companies has been shrinking as mergers, acquisitions and relocations have far outnumbered IPOs. In 2017 the region had about 60 public companies, roughly half the number listed in 2004.
Mitchell Goldberg, president of ClientFirst Strategy Inc., a Melville investment firm, pointed to the region’s high costs, the exodus of young talent and structural issues as reasons that few companies take root and reach the IPO stage on Long Island.
“What helps Long Island is what hurts Long Island,” he said. “We have a great public education system and a robust police force, but the expense of running [them] is hurting us.”
Goldberg also said that “investor patience is a lot lower” these days for unproven companies.
Jeremy Reichmann, the 30-year-old chief executive and chairman who co-founded Tal Depot LLC in 2012, said last week he was not at liberty to discuss the stock offering.
Reichmann owns 85.2 percent of Tal Depot LLC, which would become a subsidiary of a holding company, Tal Consolidated, after the IPO. Reichmann’s stake in Tal Depot, which has about 95 employees, would be exchanged for a 53.2 percent stake of the holding company following the IPO, the government filing said.
Tal Consolidated would trade under the ticker symbol TCL on the Nasdaq Capital Market. Manhattan investment bank Joseph Gunnar & Co. LLC is serving as the underwriter.
The company, which sells packaged food and drinks ranging from Oreos and Gatorade to gluten-free Vigilant Eats Organic Oat Cereal, has more than a million U.S. customers, according to government filings.
In 2017, it posted a net loss of $4 million on revenue of $26.2 million.
Like many online sellers, Tal Depot's business is closely entwined with retail giant Amazon.com Inc. The company said its sales on Amazon.com “historically” have generated most of its sales, but the online giant collects 15 percent of the sale price, cutting into profits.
Further, Amazon.com has discretion to revoke permission to sell on the platform, as it did with Tal Depot for a week in September. That cut Tal Depot’s sales that week by about 75 percent, the company said. The government filing did not specify the reason Amazon barred Tal Depot from selling on its site.
Because of that dependence, the company is seeking to wean itself from dependence on Amazon.
“Our primary focus is generating as many direct sales as possible,” the company said. “Direct sales have increased from year to year, and continuing that trend remains our goal.”
If the stock is offered at the midpoint of its price range, $7, Tal Consolidated expects to receive about $13.2 million after expenses of $1.8 million.
The company said it plans to use the proceeds to pay down debts.
The company, which delivers about 31 percent of shipments in the Northeast, also said it plans to open Midwest and West Coast warehouses and shipping centers to “attract local suppliers and have better inventory control.”