Blue Apron has reached an agreement that will transfer the company’s operational infrastructure to fresh packaged meal provider FreshRealm for up to $50 million. The nonbinding deal is set to close June 9, 2023.
As a result of this transaction, Blue Apron’s business will move to an asset-light model, focused on its core direct-to-consumer business. Blue Apron does not expect changes to its existing revenue streams because of the sale, according to a statement from the company.
Moving forward, Blue Apron says it plans to focus on growing its brand, adding new convenience product options and broadening its customer base. The transaction is expected to bolster the company’s balance sheet, drive efficiencies and support overall company value, according to the release.
“Over a decade ago, Blue Apron pioneered the U.S. meal kit industry and remains a leader in offering delicious, chef-curated meals to thousands of customers every week,” Blue Apron President and CEO Linda Findley said in the release. “As we continue to evolve, we believe there is an opportunity to simplify our direct role in the fulfillment of our product, allowing us to focus on growing our brand, our customer base and revenue in the long-term.”
Finley said the company is confident that it can continue to deliver the same product while increasing efficiency and accelerating profitability.
Leveraging expertise to expand ready-to-cook meal sales
The proposed transaction builds on Blue Apron’s current relationship with FreshRealm, the manufacturer of Blue Apron’s popular line of “Heat and Eat” meals. Once the deal closes, Blue Apron expects to be able to accelerate product innovation with faster development and commercialization, according to the release.
Additionally, Blue Apron expects to leverage FreshRealm’s expertise and full product capabilities of ready-to-heat and ready-to-cook meals. Over time, this relationship is also anticipated to open additional sales channels.
“Today’s meal industry is focused on profitability and expanded product offerings. From the beginning, FreshRealm has believed this is best achieved through organizations staying within their core competencies. This announcement positions Blue Apron to focus on the customer experience; while FreshRealm continues the path to be the leading platform to support retailers across multiple channels with a broad and efficient solutions offering,” FreshRealm’s founder and CEO Michael Lippold said in the release.
FreshRealm expands infrastructure and operations
Because of the deal, FreshRealm will be able to expand its national operational and production footprint to almost 1 million square feet and confirm strategic investments in three new leading-edge facilities, which includes the purchase of the operational infrastructure of Blue Apron, according to the release.
This increased capacity will allow FreshRealm to continue to address the growing omnichannel retail environment and rising consumer demand, according to the release. FreshRealm partners with retailers, which include Amazon Fresh, Blue Apron, Everytable, Kroger, Publix, Marley Spoon, Meijer and Walmart, to deliver customized meal solutions.
At the closing of the transaction in June, Blue Apron is set to transfer its operational infrastructure to FreshRealm, which includes fulfillment centers, equipment, expertise and personnel.
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“The investments in facilities and infrastructure are part of our company’s strategic growth, which we announced during our most recent $200 million capital raise in July 2022,” Lippold said in the release. “FreshRealm is the only fresh meals provider to deliver a national platform that simplifies how fresh ready-to-heat, ready-to-cook and meal kits are delivered through the supply chain and brought to consumers’ tables.”
In consideration of the transaction, Blue Apron expects to issue to FreshRealm warrants in an amount equal to 19.9% of the company’s then-outstanding common stock with an exercise price of $.01 per share on the closing date of the transaction, according to the release.
