Nestlé Acquires Freshly: A $1.5 Billion Deal

Nestlé USA has recently declared the completion of its acquisition of Freshly for a total of $1.5 billion, comprised of an initial payment of $950 million, with the possibility of additional payments up to $550 million contingent upon the company’s future performance.

Established in 2015, Freshly is a company headquartered in New York City that provides convenient, nutritious meals delivered directly to consumers on a weekly basis. These meals are designed for quick and easy preparation, requiring only a few minutes in a microwave or conventional oven. This offers the advantages of wholesome, freshly-made food without the extensive cooking time associated with meal kit services.

This acquisition appears particularly timely, given the current circumstances where many individuals are dedicating more time at home and focusing on self-prepared meals. As stated in Nestlé’s official announcement, Freshly is currently distributing over 1 million meals each week to customers in 48 states, and projections estimate sales of $430 million for the year 2020.

Prior to the acquisition, the startup secured a total of $107 million in funding from various investors, including Highland Capital Partners, White Star Capital, Insight Venture Partners, and Nestlé itself. Nestlé’s initial investment in 2017, leading the Series C funding round, resulted in a 16% ownership stake in Freshly and was described as a strategic step to assess and understand the expanding market.

Steve Presley, Chairman and CEO of Nestlé USA, commented, “We are witnessing a significant increase in consumer adoption of ecommerce and a preference for dining at home, trends that have been accelerated by the pandemic and are expected to continue. Freshly represents a dynamic, rapidly expanding food-tech company, and integrating it into our portfolio will enhance our capacity to leverage the evolving U.S. food landscape and strengthen Nestlé’s competitive position.”

In a message addressed to its customer base, Michael Wystrach, co-founder and CEO of Freshly, indicated that the acquisition will facilitate a threefold increase in the variety of menu options available each week. He also conveyed that the core aspects of the company’s operations are expected to remain largely consistent.