The US subsidiaries of Berlin-born meal kit company HelloFresh have entered into an agreement to acquire all of the outstanding equity interests of Factor75 – a fully-prepared meal delivery service in the US – for about $277M (approx €232.8M).
The closing of the transaction is subject to customary conditions precedent, including expiry of the waiting period under the US Hart-Scott-Rodino Antitrust Improvements Act as well as the approval from the Factor’s majority shareholders.
Currently, the transaction is expected to occur within the next few months. The total purchase price for the acquisition is $277M (approx €232.8M) in cash. Out of which, about $177M (approx €148.7M) will be payable once the deal is closed.
As for the remaining $100M (approx €84M), it is structured as a performance-based earn-out, guaranteed by HelloFresh, and ongoing management incentives.
Rothschild & Co. served as the financial advisor to Factor, and Kirkland & Ellis provided legal counsel to Factor. Sullivan & Cromwell acted as legal counsel for HelloFresh.
Growth and development plan
According to HelloFresh, this acquisition marks the next step in its growth plan in the US to strengthen its leading position and to expand its total addressable market.
With the acquisition, HelloFresh will gain its first office in the Chicago metropolitan area, along with four production and fulfilment facilities. A new facility, which will be launched in the near future, will provide the capacity to deliver more than $500M worth of prepared meals annually, claims the company. Factor’s full-year revenue for 2020 is expected to reach around $100M.
Speaking on the market potential, Uwe Voss, CEO of HelloFresh US says, “Direct-to-consumer ready-to-eat meals are a nascent food vertical that we believe has the potential to grow into a multi-billion dollar category over time. With Factor, HelloFresh, EveryPlate, and Green Chef, we have four high-growth food brands in our group, all benefiting from our strong growth engine, technology, and supply chain infrastructure.”
Founded in 2011 by Nick Wernimont, Factor is a fully-prepared meal delivery service that specialises in providing fresh, ready-to-eat meals with a focus on health and wellness. The company’s weekly rotating menu of breakfast, lunch, and dinner options are hand-crafted by gourmet chefs and optimised by dietitians.
Its menu options feature Keto, Paleo, low-carb, vegetarian, plant-based and high protein meals that can be heated in the microwave or oven and are ready in minutes. Also, every meal is free of refined sugars, gluten, soy, hormones, antibiotics, and GMOs for healthy, clean eating.
Mike Apostal, CEO of Factor, says, “By joining HelloFresh, the market leader in meal kits in the US, Factor will leverage new resources and category expertise to accelerate our growth, enhance our brand positioning, and further amplify our mission.”
Factor75 is based in Batavia, IL, and is backed by leading consumer investors Listen Ventures, Bluestein Ventures and Marcy Venture Partners.
HelloFresh was founded in Berlin in November 2011. It is a food subscription company that sends pre-portioned ingredients to its customers’ doorstep every week. It enables anyone to cook quick and healthy meals designed by nutritionists and chefs.
The company aims to provide each and every household with the opportunity to enjoy wholesome home-cooked meals. Currently, it operates in the U.S., the UK, Germany, the Netherlands, Belgium, Luxembourg, Australia, Austria, Switzerland, Canada, New Zealand, Sweden, France, and Denmark.
HelloFresh went public on the Frankfurt Stock Exchange in November 2017. In Q3 2020, the company delivered over 162 million meals and reached 5 million active customers. It has offices in New York, Berlin, London, Amsterdam, Sydney, Toronto, Auckland, Paris, and Copenhagen.
Image credit: HelloFresh