Marley Spoon Share Price Climbs 63% with Woolworths Deal

Shares of semi-prepared meal provider Marley Spoon AG [ASX:MMM] have surged by a whopping 63.6% to 72 cents a share in today’s trading.

This has been triggered by an announcement from the company around lunchtime on the ASX, which revealed they have entered a $30 million strategic partnership with Woolworths Group Ltd [ASX:WOW].

It doesn’t take a rocket scientist to figure out the potential that could come from a merger between a meal prep service and food retailer, as is seen in the highly positive market response.

The best match since pre-sliced, pre-packed bread

The partnership involves Woolworths investing $23 million into Marley Spoon through a convertible note, with an additional $7 million of issued Marley Spoon shares. This will equate to Woolworths having around a 9% stake in the company.

As per the announcement, the partnership aims for collaboration between the companies to enhance both the Marley Spoon and Dinnerly (another meal kit service) brands. Access and engagement to Woolworths’ large customer base will likely drive interest in these meal-provider services.

Marley Spoon CEO Fabian Siegel sums up this match made in heaven perfectly:

As grocery spending shifts to online, home-delivered meal kits will play an increasingly large role in helping consumers save time with their weeknight meals.

We have chosen to partner with Woolworths because it’s clear they understand what scale-up businesses need. Despite their size, they have a genuine partnership mentality, offering us support to grow the business whilst empowering us to own our own race.’

Indeed, Brad Banducci, the Woolworths CEO, believes it’s just as beneficial for the supermarket giant, as it will provide ‘exposure to the high-growth ready-to-cook meal kits segment and aligns with our ongoing goal of meeting our customers’ needs for healthy and convenient meal solutions.’

The meal ticket Marley Spoon shares have been waiting for

While any company would love a share price hike of this magnitude, today’s gains are particularly appealing to Marley Spoon, who were sitting at just 38 cents at the end of April, after debuting on the ASX less than 12 months prior at $1.42.

Even after today’s jump, the company are still sitting on a negative one-year return of $37.24%.

That being said, CEO Siegel says this merger is far from ‘a rescue operation’, rather a competitive leap into a pond of hungry customers, so to speak.

So it seems analysts, investors and the market alike are all seeing eye to eye on the suitability of this partnership.

But ultimately, if the everyday grocery shopper fails to see the appeal in pre-portioned, pre-prepped, ready-to-cook meals, this move will be to no avail.

So even with such a positive initial sentiment, it’s still only time that will tell if this partnership does in fact pay off.

Regards,

Ryan Clarkson-Ledward,
For Money Morning

PS: Perhaps it isn’t convenience that the next wave of the food industry is after. Check out this free report on the ‘Hamburger Revolution’ too see how veganism is bringing on a whole new sector of the market packed with investor potential. Download now.


Ryan Clarkson-Ledward is an Editor at Money Morning.

Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects.

Ryan is also the Editor of Australian Small-Cap Investigator, a stock tipping newsletter that hunts down promising small-cap stocks by dissecting the latest events affecting the world.

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