The Marley Spoon AG (ASX: MMM) share price is on course to finish the week in spectacular fashion after the subscription-based meal kit company signed a partnership with Woolworths Group Ltd (ASX: WOW).
Its shares were up as much as 82% to 80 cents shortly after the release of the announcement. They have since dropped back a touch but are still up a sizeable 66% to 73 cents at the time of writing.
What was announced?
This afternoon Woolworths announced that it has entered into a strategic partnership in the Australian market with Marley Spoon which includes a $30 million investment via a senior secured convertible note ($23 million) and issue of Marley Spoon shares ($7 million).
The issue of shares will result in the conglomerate owning approximately 9% of Marley Spoon and the convertible note is structured to allow Woolworths to participate in the growth of its Australian business.
In addition to this, the release explains that the agreement will see both parties working collaboratively to grow the Marley Spoon and Dinnerly brands in Australia and to build operational synergies. The agreement has an initial exclusive term of five years.
Woolworths rival Coles Group Ltd (ASX: COL) is known to have its eye on the meal kit market, but Woolies may have just raced ahead with this deal.
What are the benefits of the partnership?
Woolworths advised that it expects to gain valuable insights from Marley Spoon's market experience as it looks to complement its current customer offering online by promoting Marley Spoon's meal kits service through the partnership.
Whereas Marley Spoon is expected to benefit from Woolworths' deep industry experience, through the ability to engage with Woolworths' customer base, and to work with the Woolworths sourcing and supply chain teams.
Woolworths CEO, Brad Banducci, said: "This partnership gives Woolworths 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. Marley Spoon has demonstrated it has a customer focused, innovative and entrepreneurial culture and we are excited to partner with them."
The CEO of Marley Spoon, Fabian Siegel, was equally positive on the partnership.
He said: "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 see this partnership delivering important benefits to both Marley Spoon and Woolworths, with both parties incentivised to grow Marley Spoon's business in Australia."
Adding: "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 run our own race."
Shareholders of Marley Spoon will no doubt be hoping that this partnership helps take its share price higher in the coming months. The company's shares hit the ASX boards just under a year ago with an IPO price of $1.42 per share, significantly higher than where they are trading today.
