REG - Huddled Group PLC - Acquisition of Food Circle

HuddledAnnouncement

12/04/2024 07:00

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RNS Number : 3548K  Huddled Group PLC  12 April 2024

12 April 2024

 

Huddled Group plc

(the "Company" or the "Group")

Acquisition of Food Circle

 Expansion of Group's e-commerce portfolio

Introduction

Huddled Group plc (AIM:HUD), the Group focused on building a portfolio of
e-commerce brands,  announces the acquisition of online retailer Food Circle
Supermarket Ltd ("Food Circle") for total consideration of up to £300,000
(the "Acquisition"). The Acquisition comprises the entire stock, intellectual
property and website (www.foodcirclesupermarket.co.uk) and other social
channels of Food Circle.

About Food Circle

Founded in 2018, by owner/operators Paul Simpson and James Barthorpe,
Sheffield-based Food Circle is an online, direct-to-consumer retailer
specialising in discounted foods for healthy and specialised diets such as
high-protein and energy products. Food Circle serves customers across the UK
and has become a trusted partner for well-known brands within this market,
including Huel, Nakd, Grenade and Optimum Nutrition, amongst others.

Food Circle delivers an average of c. 3,000 orders per month, with an average
order value of c. £40. It places a strong emphasis on providing good value
and excellent service to customers and has over 5,000 TrustPilot reviews, with
a rating of 'Excellent' on the platform.

The business has seen strong growth since inception and delivered unaudited
revenue of £1.4m and a small net loss of £46k for the year ended 31 December
2023. With access to additional funds to grow its range and other expected
synergies as a result of becoming part of the Group, the Board believes that
Food Circle can be grown significantly. Paul Simpson and James Barthorpe will
continue in their current roles and will be supported to grow the business.

Rationale for the Acquisition

Food Circle is complementary to the Group's Discount Dragon business and is
the next step in the Group's strategy to build a portfolio of e-commerce
brands.  Aligned with Discount Dragon, Food Circle reduces food waste and
surplus food through the sale of discounted and short-dated stock, as well as
being an attractive choice for consumers as they look to spend more
cautiously.

Food Circle's trading to date is underpinned by strong market drivers in
health foods, the demand for direct delivery, and a search for value among a
broad range of consumers.

Upon completion, additional working capital will be made available to the
business allowing it to purchase a broader and deeper range of relevant stock,
as well as a deeper range of the faster selling items and increase customer
acquisition marketing. It is intended that the fulfilment of the Food Circle's
orders will be transitioned to the Group's warehouse in Leigh at the
appropriate time.

The Food Circle brand will continue to trade from a standalone website, with
the clear mission to build a market leading position in the direct-to-consumer
online supply of discounted surplus foods for health and specialised diets.

Consideration

The consideration comprises of an initial payment of £100,000 in cash and
£50,000 in shares.  A further £50,000 in shares will be payable on the
first anniversary of the Acquisition, subject to any adjustments in the event
of any warranty claims against the sellers.  An additional £100,000 in cash
will be payable if Food Circle meets certain targets during its first 12
months post-acquisition.

The Company has allotted, conditional to admission to trading on AIM
("Admission"), a total of 2,096,436 new Ordinary Shares(1) in the Company at a
price of 2.385 pence in satisfaction of the £50,000 initial share
consideration (the "New Ordinary Shares").  Application has been made for the
New Ordinary Shares to be admitted to trading on AIM, with Admission expected
to take place on or around 16 April 2024.  Upon Admission, the New Ordinary
Shares will rank pari passu in all respects with the existing ordinary shares.

Total Voting Rights

Following Admission, the total number of voting rights in the Company will
be 320,401,579. Shareholders may use this figure as the denominator for the
calculations by which they will determine if they are required to notify their
interest in, or a change to their interest in, the Company under the FCA's
Disclosure Guidance and Transparency Rules.

Martin Higginson, Chief Executive Officer of Huddled Group PLC said:

"We're delighted to announce this exciting opportunity to further strengthen
our position in the online surplus food and drink market, alongside our
existing brand, Discount Dragon. Food Circle is positioned at the intersection
of a number of market trends; the continued search for value among consumers,
the demand for e-commerce and direct delivery services, and the growth in
health and nutrition products to support active lifestyles. It has developed
important relationships with brands for whom responsible disposal of surplus
stocks remains a priority and this will remain a core mission for Food Circle.

Paul and James have done an amazing job growing the business to a turnover of
£1.4m with very limited capital and therefore range. We are convinced given
access to additional funds the pair will quickly grow this business to new
heights."

Paul Simpson and James Barthorpe, Founders of Food Circle said:

"We are delighted that Food Circle is joining the Huddled Group plc family. We
have worked hard to build our business from the ground up since our formation
in 2018, and feel that now is the ideal time to join a growing group with
exciting ambitions for the future.

We believe that Huddled Group plc is the perfect partner to help us unlock the
huge potential of Food Circle. The business is positioned in a rapidly growing
market, and we are confident that this acquisition will enable us to build on
the work we have done so far in helping brands to reduce waste, while
maintaining their brand equity, and offering consumers access to high quality
products at competitive prices."

(1) ordinary shares of 0.040108663 pence each in the Company ("Ordinary
Shares")

- Ends -

 

 Enquiries:

For further information please visit www.huddled.com/investors, or contact:

 Huddled Group plc                                    investors@huddled.com

 Martin Higginson

 David Marks

 Daniel Wortley

 Zeus (Nominated Adviser and Sole Broker)             Tel + 44 (0) 203 829 5000

 Nick Cowles, James Hornigold, Alex Campbell-Harris   (Investment Banking)

 Dominic King                                         (Corporate Broking)

 Alma Strategic Communications (Financial PR)         huddled@almastrategic.com

 Rebecca Sanders-Hewett

 Sam Modlin

 Kieran Breheny

 

 

 

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