HelloFresh to Acquire Prepared-Meal Rival Factor75 for $277M

Hello, healthy eaters. Hello, fully-prepared meals.

U.S. subsidiaries of the online meal kit retailer HelloFresh SE have entered into an agreement to acquire all of the outstanding equity interests of Factor75 Inc., a Chicago-based rival specializing in fully prepared fresh meals focused on health and wellness customers.

HelloFresh said it would pay up to $277 million in cash for Factor75. Of that amount, $177 million is payable upon closing with another $100 million structured as a performance-based earn-out.

Factor is on pace for sales of approximately $100 million in 2020. Its acquisition comes as the global pandemic drives soaring interest in direct-to-consumer food sales.

“Direct-to-consumer ready-to-eat meals are a nascent food vertical that we believe has the potential to grow into a multibillion-dollar category over time,” Uwe Voss, CEO of HelloFresh U.S., said in a statement. “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.”

HelloFresh, based in Berlin and operating in 14 countries, has seen demand skyrocket during the pandemic, more than doubling its worldwide sales in the third quarter while recording highs in active customers (5 million) and orders (19.49 million). Factor will complement its current offering in the U.S., which in addition to its flagship HelloFresh brand, also operates a value tier called EveryPlate and a GreenChef, a meal-kit brand offering organic and health-focused ingredients.

HelloFresh will gain its first office in the Chicago metropolitan area, along with four production and fulfillment facilities. A new facility, which will be launched in the near future, will provide capacity to deliver more than $500 million worth of prepared meals annually, the company said.

Due to the complementary nature in product offerings, the acquisition of Factor will drive supply chain and operational synergies for both companies, HelloFresh added.

Founded in 2013, Factor specializes in providing fresh, ready-to-eat meals with a focus on health and wellness. Its rotating menu of breakfast, lunch and dinner 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. Factor offers a variety of subscription plans, according to its website, including four meals a week (at $15 per meal), eight meals a week ($12.38) and 12 meals a week ($11.50). Each subscription includes a free 20-minute consultation with a registered dietitian; the service also sells additional nutrition services like coaching on a subscription basis.

“Since our founding, Factor has been at the intersection of taste, health and convenience, providing simple, clean eating that not only tastes great but fuels consumers’ active and busy lifestyles,” said Mike Apostal, CEO of Factor. “By joining HelloFresh, the market leader in meal kits in the U.S., Factor will leverage new resources and category expertise to accelerate our growth, enhance our brand positioning and further amplify our mission.”

The closing of the transaction is subject to customary conditions, including federal antitrust review and approval by the majority of Factor’s shareholders, and is currently expected to occur within the next months. Rothschild & Co. served as exclusive financial adviser to Factor, and Kirkland & Ellis provided legal counsel to Factor. Sullivan & Cromwell acted as legal counsel for HelloFresh.