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Meal kit business Blue Apron announced Friday it has agreed to sell itself to food and restaurant company Wonder Group, founded by entrepreneur Marc Lore, for $103 million.
The deal, at $13 per share, represents a big premium from Blue Apron’s per-share price at Thursday’s close of $5.49.
The sale caps years of ups and downs for Blue Apron, once a pacesetter in at-home meal deliveries. In recent months, the corporate has transitioned to develop into a more asset-light business, selling its operational infrastructure to California-based meal provider FreshRealm for $50 million and shedding significant swaths of its workforce.
“The Blue Apron brand and products that our customers know and love will stay the identical, with more opportunity for product expansion in the long run,” Blue Apron CEO Linda Findley said in an announcement Friday.
A checkered past
Blue Apron has long been mired in strategic difficulties since its mid-2010s heyday.
The corporate was founded in 2012, billing itself as a neater way to prepare home-cooked meals. Boxes arrived at the client’s doorstep with pre-portioned ingredients and recipes to create their chosen dishes. The corporate specifically targeted working professionals in large cities who can have less time to grocery shop and cook.
In 2015, the corporate secured $135 million in funding from big name backers including Fidelity Investments at a valuation of $2 billion, the Wall Street Journal reported on the time. The corporate even turned a profit in the primary two quarters of 2016, wowing potential investors ahead of an eventual IPO.
Blue Apron went public in June 2017 at $10 a share and a valuation of about $1.89 billion. The corporate initially forecasted a variety of $15 to $17 per share, but lowered its projected per-share price following Amazon’s acquisition of Whole Foods Market, announced just weeks before the IPO.
Blue Apron stock gained little ground on its opening day.
By then, the tide had already begun to turn for the meal kit business. Blue Apron reported a lack of $52 million in the primary quarter of 2017 on $245 million in revenue. That single quarter of losses rivaled the corporate’s full-year deficit from 2016 of $54.9 million.
Competition intensified for Blue Apron, as other meal kit businesses popped up on the scene like HelloFresh and Home Chef. Blue Apron still dominated 40.3% of the market, Verge reported on the time, but had lost 17% of its share since September 2016. HelloFresh trailed behind at 28% market share.
Shortly after the IPO, quite a lot of shakeups took place inside the company’s top executives. Co-founder and then-Chief Operating Officer Matthew Wadiak stepped down from his post lower than a month after the IPO, and CEO Matt Salzberg was replaced by chief financial officer Brad Dickerson later that 12 months, while Salzberg became executive chairman.
By the top of 2017, the situation looked bleak: The corporate said in its 2017 year-end report that it had lost 15% of its customer base 12 months over 12 months, citing decreased marketing spend. Net losses in 2017 amounted to $210 million.
By December of the next 12 months, shares of Blue Apron had dipped below $1 per share, and the corporate was susceptible to getting delisted from the Recent York Stock Exchange. Investors were reportedly spooked by Amazon’s acquisition of Whole Foods, high marketing expenses, and success center issues.
Rescue plan
In early 2020, reports surfaced that Blue Apron was considering going private.
Soon after, the corporate announced the closure of its Arlington, Texas, facility and the furlough of 240 employees as a part of an effort to construct “operational optimization and financial discipline to support our strategy and return to growth.”
CEO Linda Findley acknowledged throughout the company’s fourth quarter 2019 earnings call that the board was evaluating several strategic options to “maximize shareholder value.” Shares of Blue Apron traded for lower than $4 apiece on the time, even after a reverse stock split to boost the per-share price.
But shortly thereafter, the Covid pandemic took hold and lockdowns kept people at home, respiratory latest life into the corporate. Blue Apron shares rallied from mid-March to mid-April 2020, jumping 400%.
But because the pandemic waned and demand for at-home meals slumped, Blue Apron sought out third-party partnerships to capture latest customers. It began offering its meal kits on Walmart.com and opened up its preexisting Amazon partnership to include those with out a Prime subscription.
Even so, the corporate continued to struggle, reporting a net lack of $109.7 million for 2022.
Enter, Wonder Group.
The corporate began making waves in May 2021, operating a fleet of faceless vans in Westfield, Recent Jersey. Wonder’s goal was to deliver fantastic dining options to residents of the Recent York City suburb. Vans were retrofitted as kitchens to cook and deliver the food to the client.
The corporate partnered with restaurants to recreate their menu in an effort to save affluent suburbanites from having to go into town to eat their favorite fantastic dining options.
By 2023, Wonder had abandoned the food truck concept, as an alternative opting for a food hall restaurant concept that provides several menus inside the same store. Similar to the food truck concept, Wonder has licensing deals with other well-known restaurants to prepare their foods in Wonder locations.
Last 12 months, Wonder raised $350 million at a $3.5 billion valuation, according to the Wall Street Journal.
For now, Wonder has indicated that Blue Apron will operate kind of the identical.
“Wonder plans to proceed Blue Apron’s current operations serving customers nationwide under the Blue Apron brand, with expected latest synergies between consumer-facing apps and delivery logistics,” Blue Apron said Friday.
“At home meals play a key role on this vision,” Wonder CEO Marc Lore said on Friday. “When the chance presented itself to unite with Blue Apron, pioneers within the meal kit industry, we knew it will speed up our strategic position.”