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While the deal values New York-based Freshly at $950 million, Nestlé will pay up to $550 million in additional earnouts, depending on Freshly’s successful growth.
Nestlé, which has its U.S. headquarters in Arlington, Virginia, is known for being the largest food and beverage company in the world, with brands like Kit-Kat, Haagen-Dazs and Cheerios in its portfolio. Freshly has made its name as an easy way to eat healthy, with a weekly subscription service for chef-prepared meals ready to heat up and eat delivered to customers’ homes. This year, Freshly expanded into a B2B service to help companies provide meals to their employees working from home, and the service has been rapidly growing, even faster than its core consumer business, according to CEO Michael Wystrach.
The deal isn’t the first time Nestlé and Freshly have worked together. Nestlé led Freshly’s $77 million Series C in June 2017, buying a 16 percent stake in the startup.
“To some degree the (acquisition) talks started in 2017,” Wystrach said in an interview with Crunchbase News. “They initially had approached us as a full acquisition and we said it wasn’t right for us.”
Freshly, which was founded in 2012, had to date Nestle before they got married, as Wystrach put it. And although Freshly will be a part of Nestle, the company will operate independently as it currently is.
“What they’re able to bring to us is just on every aspect, a ton of support,” Wystrach said. “They’re extremely excited and they’re making a lot of investments in different aspects of health.”
Going forward, Freshly will be focused on accelerating growth and offering more variety and quicker delivery times, as well as reaching people in different places. The company, which has been profitable since 2019, ships more than 1 million meals per week to customers in 48 states, and its 2020 sales forecast is around $430 million, according to a statement from the companies.
“Consumers are embracing e-commerce and eating at home like never before,” Nestlé CEO Steve Presley said in a statement. “It’s an evolution brought on by the pandemic but taking hold for the long term. Freshly is an innovative, fast-growing, food-tech startup, and adding them to the portfolio accelerates our ability to capitalize on the new realities in the U.S. food market and further positions Nestlé to win in the future.”
Illustration: Li-Anne Dias