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Food and Beverage M&A Acquisition Alerts
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Wonder To Acquire Blue Apron for $13 a Share

Private equity-backed Wonder makes an offer to acquire meal-kit producer Blue Apron for just USD $103 million. 

Wonder, a food and beverage delivery company that also runs food halls, made an offer on September 29, 2023, to acquire Blue Apron, a publicly listed company providing at-home meal kits in the United States. Both companies are based in New York, United States. Wonder made the acquisition to enter the at-home meal kit segment and expand geographically in the United States.

Transaction Summary

Our Take on the Acquisition

Wonder Group (acquirer) made the offer to acquire all shares of Blue Apron (target) to expand its product line to include at-home meal kits. Wonder currently operates food halls in New Jersey and New York, and this acquisition will enable it to service consumers at home across the United States. In June 2023, Wonder launched Wonder+, a new membership program that allows customers to order via its app, as well as third-party apps like Uber Eats and Doordash. For now, Wonder has indicated that Blue Apron will continue to operate as it has in the past. It is expected that Wonder will add its own meals to supplement Blue Apron’s offerings.

The acquisition offer has been structured as a merger agreement, so Wonder may have made the offer to Blue Apron to execute a reverse merger and thereby be listed as a publicly listed entity itself once the merger is complete. A reverse merger is when a private company becomes a public company by purchasing control of the public company.

The Facts of the Acquisition

  • Target: Blue Apron is a publicly listed company that has been producing at-home meal kits in the United States since 2012. The company received venture capital funding and went public in 2017 with a $1.9 billion valuation. However, the company’s value has deteriorated due to intense competition from companies like Home Chef, EveryPlate, Marley Spoon, and HelloFresh in the meal kit segment. Selling its operational infrastructure and forming a strategic partnership with FreshRealm in June 2023 resulted in a shift to an asset-light business structure. FreshRealm continued to produce Blue Apron meal kits, and that agreement will continue with Wonder, according to the companies. More details on the background of the transaction will be included in the company’s Schedule 14D-9 concerning the tender offer.
  • Acquirer: Marc Lore founded Wonder after leading e-commerce at Walmart and starting and running several companies such as Quidsi and Jet.com. Wonder initially ran mobile kitchens serving meals designed by celebrity chefs but then pivoted its business strategy to conventional meal delivery. Wonder is a privately held company with licensing deals with well-known restaurants to provide their menus in New York and New Jersey. In 2022, the company received venture capital firm funding of USD $900 million at a valuation of USD $3.5 billion.

The Transaction

Date:September 29, 2023
Price:USD $103 million
Purpose: To expand geographically in the United States and vertically into the at-home meal segment by creating a leading platform that Wonder calls “a mealtime super app” to enhance both companies’ abilities to deliver chef-curated meals to more customers nationwide. Wonder plans to continue Blue Apron’s current operations, with expected new synergies between consumer-facing apps and delivery logistics.
Acquirer’s Statement:Marc Lore, Wonder Group Founder and Chief Executive Officer – “Wonder is creating the mealtime super app, serving a broad range of occasions that feature cuisines from some of the world’s best chefs and restaurants while leveraging our culinary engineering and vertically integrated model. At-home meals play a key role in this vision and have been on our strategic roadmap since the beginning. When the opportunity presented itself to unite with Blue Apron, pioneers in the meal kit industry, we knew it would accelerate our strategic position, create immediate opportunities for synergy, and, most importantly, enable us to further delight customers by expanding the ways you can access and experience Wonder. We couldn’t be more excited to welcome Blue Apron to the Wonder platform and look forward to working with Linda [Findley, CEO of Blue Apron] and her exceptional team.”
Details:Blue Apron’s shareholders will receive USD $13.00 in cash per share, representing a total equity value of USD $103 million. The deal is expected to close in the fourth quarter of 2023. According to Blue Apron, the transaction’s closing is not subject to any financing conditions or regulatory approvals, and Wonder has committed financing on its balance sheet to fund the deal. J.P. Morgan Securities LLC is acting as the exclusive financial advisor, and Wilmer Cutler Pickering Hale and Dorr LLP is acting as legal counsel to Blue Apron. Goldman Sachs & Co. LLC is acting as the exclusive financial advisor, and Fenwick & West LLP is acting as legal counsel to Wonder.

Target/Seller: Blue Apron

Company Information

Target:Blue Apron
Website:blueapron.com
Founded:2012
Industry: Food Products – Home Meal Kits
Type:Publicly listed (Ticker: APRN)
Employees:1,575 (Self-published on LinkedIn)
Locations:Head Office: 28 Liberty Street, Floor 28, New York, United States

Product Information 

Products:Meal Kits – Meal kits with exact ingredients and recipes
Wines – Assorted red and white wines
Market Reach:United States

Financial Information 

Market Cap: USD $82.3 million
Revenue:USD $458 million (Source: Pitchbook)
Revenue per Employee:USD $290,794 (i.e., USD $458 million / 1,575 employees = USD $290,794 – estimated based on the self-published number of employees and revenue from Pitchbook)
EBITDA: Negative USD $84 million
P/E Ratio: N/A – Earning is negative
EV/EBITDA Ratio: N/A – EBITDA is negative

Did You Know?

A food hall or food market is a cafeteria-style market with vendors, often offering multicultural cuisines. Vendors are usually up-and-coming local food spots founded by chefs and restaurateurs, although some can be family-owned businesses. Food halls sometimes include markets, allowing customers to shop for groceries and other specialized items. They may also feature specific vendors such as florists, bakers, and butchers. Food halls differ from food courts in shopping malls. Food courts share a similar layout, with a fast-food restaurant, a pizza place, and an ice cream or cookie shop. The primary purpose of a food court is to grab a quick bite when shopping.

Where food halls differ is that while food courts are composed of well-known chains, food markets offer local, artisan foods that are often made to order. In many cases, you see the chefs preparing your food, whereas in a food court setting, the food is usually in a display case. Food halls highlight creations from local chefs and aspiring restaurateurs, so they are a way to immerse yourself in a city’s culture instead of a commercialized dining experience.

Target/Seller Overview: Blue Apron

Blue Apron was founded in 2012, billing itself as an easier way to prepare home-cooked meals with pre-portioned ingredients and recipes. The company received venture capital funding and completed an IPO in 2017 with an almost USD $2 billion valuation. But due to competition from other home meal kit companies, the company’s position substantially deteriorated over the years, and Blue Apron had to downsize and restructure its operations. It got a boost due to the COVID-19 pandemic, which kept people at home. As a result, Blue Apron shares rallied from mid-March to mid-April 2020, jumping 400%.

Unfortunately, as the pandemic started to end and the need for at-home meals decreased, Blue Apron sought out third-party partnerships to capture new customers. It began offering its meal kits on Walmart.com and opened its preexisting Amazon partnership to include those without a Prime subscription. Even so, Blue Apron continued to struggle, reporting a net loss of $109.7 million in 2022.

Blue Apron provides all the ingredients and recipes to prepare a gourmet meal at home.

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Buyer/Acquirer: Wonder

Company Information

Buyer:Wonder
Website:wonder.com
Founded:2018
Industry: Food Delivery and Restaurant
Employees:1,900 (Source: Pitchbook)
Type:Private with two rounds of venture capital funding
Total Funding:USD $900 million
Locations:Head Office: 150 Greenwich St, 4 World Trade Center, 57th Floor, New York, United States
Investors:Bain Capital Ventures: An early-stage venture capital firm that invests in seed to growth-stage start-ups using technology to disrupt existing markets. The firm is based in California, United States.
Accel: A seed and growth-stage venture capital firm headquartered in California, United States.
Alpine Group: A venture capital investment firm with headquarters in Washington D.C., United States.
Amex Ventures: A venture capital firm investing in start-ups to accelerate innovation for consumers and businesses. The firm is based in California, United States.
Forerunner Ventures: A venture capital firm with headquarters in California, United States that focuses on start-ups that deliver value to modern consumers.
General Catalyst Partners: A venture capital firm that provides early stage and growth equity investments based in Massachusetts, United States.
Google Ventures: The investment arm of Alphabet based in California, United States that provides seed, venture, and growth-stage funding to technology companies.
New Enterprise Associates: A global venture capital firm investing in technology and healthcare headquartered in California, United States.
YieldStreet: An alternative investment platform based in New York, United States that provides retail investors with access to income-generating investment products.

Product Information 

Products:Gourmet Meals: Fresh gourmet meals licensed from some of the finest restaurants and chefs across the United States.
Market Reach:New Jersey
New York

Financial Information 

Revenue:USD $100.6 million (Source: Growjo)
Revenue per Employee:USD $52,947 (i.e., USD $100.6 million / 1,900 employees = USD $52,947 – estimated based on the number of employees from Pitchbook and revenue from Growjo)

Buyer/Acquirer Overview: Wonder

In May 2021, Wonder started operating a fleet of vans retrofitted as kitchens to cook and deliver fine dining options to New Jersey and New York residents. By 2023, Wonder abandoned the food truck concept, instead opting for a food hall restaurant concept that offers several menus within the same store. It also has an app and new program, Wonder+, where customers can order food with free delivery with no minimum order value required. Unlike other delivery services, Wonder is entirely vertically integrated, which means it owns and operates every aspect of the process, from the front-end app and food prepping to the preparing and delivering of meals. The company has been funded USD $900 million over several rounds of venture capital funding and was valued at USD $3.5 billion in its last round of funding in 2022.

Wonder has licensed menus from well-known restaurants in the United States.

Sources

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