An extraordinary period for shareholders in meal delivery company Youfoodz (ASX: YFZ) is set to come to a close, albeit many are likely to be disgruntled with the Company recommending a takeover bid from rival HelloFresh at a whopping 57% discount on their IPO price just 8 months earlier.
The takeover has come by way of a scheme of arrangement where HelloFresh has offered to acquire all YFZ shares at $0.93 each. While the bid appears to be coming at an 82% premium on the last close price of $0.51, it is a long way off the IPO price of $1.50 when Youfoodz listed on the ASX in December 2020 after raising $70 million for their IPO.
“The Youfoodz Board unanimously recommends that Youfoodz shareholders vote in favour of the Scheme in the absence of a superior proposal and subject to the Independent Expert concluding (and continuing to conclude) that the Scheme is in the best interests of Youfoodz shareholders,” the Company said in their announcement.
Majority shareholders RGT Capital, which holds 57.4% of Youfoodz shares, have already confirmed their intention to vote in favour of the scheme.
The opportune bid from HelloFresh would secure the rival meal kit delivery company with around 145,000 active customers which delivered Youfoodz $50.2 million in revenue for the Quarter ended 31 March 2021.
Meal kit delivery services proved hugely popular from the beginning of the COVID-19 pandemic by saving households the need to visit overcrowded supermarkets. This saw significant valuation increases in the sector which ultimately led to the Youfoodz IPO but was quickly followed by turbulence when momentum could not be sustained when pandemic restrictions eased.
These consumer trends had an adverse impact on Youfoodz and their Prospectus forecasts which initially flagged $2.9m EBITDA for FY21. This was quickly reined into $1-2m in their March quarterly update. YFZ shares subsequently hit an all-time low in May when trading as little as $0.375 at which point 75% of their $202m market cap at listing had been wiped in the space of 6 months.
Shares recovered through June to trade around $0.50 but with the Board voting in favour of the takeover, it seems that internal opinions cannot see customer demand getting even close to its pandemic-induced highs.
Youfoodz operates three production facilities in Brisbane, Australia. The facilities produce more than 400,000 ready-made meals, 80,000 snacks and 25,000 drinks per week on average.