Meal kit company HelloFresh has entered a scheme of arrangement with ready meal specialist Youfoodz to buy 100 per cent of the company for $125 million.
The proposed sale doesn’t leave Youfoodz shareholders hungry, with the proposal offering $0.93 per share, 82 per cent higher than its last close at $0.51 cents. That said, investors who bought shares at $1.50 in Youfoodz’s initial public offering in December last year are still running at a loss with its shares never trading above that issue price.
Youfoodz will continue to operate under its own brand with founder and CEO Lance Giles staying at the helm.
The company’s largest shareholder RGT Capital (with a 57.4 per cent stake) said it supports the scheme in the absence of a rival offer.
Youfoodz omnichannel sales model has around 850,000 home delivery customers via B2C and business-to-business (B2B) offerings. Its B2B market includes major and independent supermarkets, petrol and convenience stores, corporate and government customers.
Giles said the deal would combine HelloFresh’s expertise in supply chain management, technology and D2C marketing with Youfoodz reputation for healthy and fresh ready meals.
“Since our inception in 2012, we are proud to say that we have delivered over 60 million ready-made meals to our home delivery, retail and corporate customers.
“Joining the HelloFresh group is a significant endorsement of our brand and the success we have enjoyed as a business in the ready-made meal sector. Partnering with a global leader like HelloFresh will help us accelerate growth of our business and enhance our customer offering through new menu offerings, customer initiatives and enriched service levels.”
D2C the growth market
For Youfoodz, Q3 FY21 recorded its highest quarterly result in new business-to-customer (B2C) customer acquisitions (56,294 people), representing 20 per cent growth vs the prior comparative period (pcp).
Its website visits were up by 6.3 per cent, app downloads up by 39.3 per cent, and app-based transactions up by 120.9 per cent – all compared to the (pcp).
Its net revenue for Q3 was $35.3 million, up 18.2 per cent vs pcp, but B2B gross revenues were down 3.8 per cent relative to pcp to $15.6 million, reflecting ongoing COVID-19 restrictions on wholesale customers in certain channels (in particular petrol and convenience, gyms and corporate).
HelloFresh ANZ CEO Tom Rutledge said the acquisition is part of the company’s strategy to become a global leader in the D2C food solutions market.
In Australia, the local ready meal market is set to grow from around $6 billion in 2020 to $9 billion in 2025, with around $2.3 billion of that being the chilled food market. Within that market, 30 per cent is expected to come from the B2C sector.
“We are impressed by Youfoodz’ strong product and manufacturing capabilities. Its complementary product and capability backed by a well-known brand and highly capable team will allow us to serve more meal occasions to more people. We look forward to being able to contribute our expertise to jointly capitalise on a strong growth opportunity,” Rutledge said.
Youfoodz has a new 13,200 square metre facility earmarked for completion in Q1FY23 to bring all three manufacturing facilities and two offices under one roof and increase its capacity to around 1.1 million meals per week.
HelloFresh CEO Dominik Richter said the successful launch of its Factor75 ready meal brand in the US, meant Youfoodz was an important component of the company’s growth strategy. “The popularity of ready-to-eat services in Australia in a well-established and growing sector offers us a good opportunity to further strengthen our position by offering further choice of meal solutions and price points to our customers,” Richter said.
Youfoodz is being advised by Greenhill & Co and Baker McKenzie; HelloFresh is being advised by Clayton Utz.
