Youfoodz taps Greenhill, Baker McKenzie for HelloFresh bid

The popularity of ready-made meals is booming.

Youfoodz has tapped Greenhill and law firm Baker McKenzie for the proposed $125 million acquisition by HelloFresh.

The company announced the buyout proposal by way of scheme of arrangement to the market on Tuesday.

Youfoodz specialises in the production and distribution of ready-made meals and other convenience food products for home delivery and retail and corporate customers. Its earnings are set to be less than expected this financial year after being impacted by Covid-19.

The deal is at 93c per share, an 82 per cent premium to the last closing price, but lower than the $1.50 per share that the company listed at in December.

The offer has been recommended by the Youfoodz board.

RGT Capital, which holds 57.4 per cent of the shares and comprises a group of family offices, intends to vote in favour of the transaction.

The price is also 38 per cent higher than the volume average weighted price over the past six months of 67c.

HelloFresh operates in the United States, the United Kingdom, throughout Europe, Canada and New Zealand.

Founded in Berlin, it is listed in Germany and was self-advised for the transaction, although did call on the services of law firm Clayton Utz.

Youfoodz has about 10 per cent of the Australian ready meals market and listed in December, raising $70m for its initial public offering at $1.50 per share with its market value at $202m.

However, shares in the business have failed to fire in the public arena.

In April, the company indicated that its earnings before interest, tax, depreciation and amortisation were expected to be in the range of $1m to $2m compared to the $2.9m IPO prospectus forecast due to under performance in the business-to-business segment, impacted by Covid-19.

HelloFresh is said to be aggressively expanding internationally with consolidation expected to play out in the ready meals and meal kit industry.

Last year, it purchased Factor75 in the United States for US$277m and sees Australia as a key market.

Founder and managing director Lance Giles owned 21.7 per cent of the business before it was listed and after heading to the boards, his stake was 14 per cent.

Other groups that could be targets for industry consolidation are the listed My Food Bag Group and My Muscle Chef.