7 months after listing at $1.50 per share, Youfoodz gets a takeover bid at 93 cents
Food & Agriculture
Food & Agriculture
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Brisbane-based food delivery company Youfoodz (ASX:YFZ) is set to end its tenure on the ASX thanks to a takeover bid from HelloFresh.
Youfoodz was founded in 2012 and listed before Christmas at $1.50 per share but never saw those heights again. It was one of the worst performing IPOs of last year and closed at 51 cents yesterday.
This morning Youfoodz shareholders woke up to news of the HelloFresh takeover which is priced at 93 cents per share. With the board and majority shareholder RGT Capital both backing the bid it seems a fait accompli.
“The transaction combines Youfoodz strength in developing and manufacturing delicious ready-made meals with HelloFresh’s expertise in supply chain management, technology and direct-to-consumer marketing,” the company said.
“Both companies are unified in their purpose to provide Australians with delicious, high quality and affordable fresh meals.”
The Youfoodz takeover by HelloFresh is expected to be voted on and closed in October or November.
Youfoodz shares rose to match the offer and as at 10.15am was the best performing company on the ASX.
There’s little doubt that food delivery is a growing industry.
Youfoodz estimated in its IPO the market for ready-made meals was $3.2 billion at retail prices in FY20 and since FY16 has increased as a compound annual growth rate of 11.3 per cent.
But with several companies in the game, it is a competitive struggle.
Youfoodz told its shareholders it expected $149.9 million in revenue and $2.9 million in earnings for FY21. In its most recent quarterly it downgraded revenue guidance to $146-$148 million and earnings between $1 million and $2 million.
The company admitted underperformance and blamed the impact of COVID-19 in the retail channel and “the strategic decision to invest in marketing and other customer acquisition initiatives to drive continued new B2C customer growth.”
Yet Youfoodz isn’t alone as an underperformer from a share price perspective.
Marley Spoon (ASX:MMM) is trading at nearly $3, which is more than double double its 2018 IPO price of $1.42. But it took until COVID-19 hit for investors to realise just how hot demand was and for shares to take off.
One other company partially in this space is Dragontail Systems (ASX:DTS) which back in May got a takeover offer from Yum Brands.