(Sharecast News) - E-commerce investor Huddled Group announced the acquisition of online retailer Food Circle Supermarket on Friday, for total consideration of up to £0.3m.
The AIM-traded firm said Food Circle, launched in 2018 by Paul Simpson and James Barthorpe, is a Sheffield-based online retailer specialising in discounted foods tailored for healthy and specialised diets, such as high-protein and energy products.
It said the acquisition included Food Circle's entire stock, intellectual property, website and other social channels.
With an average of 3,000 orders per month and an average order value of about £40, Food Circle said it had gained trust among its customers, boasting more than 5,000 TrustPilot reviews with an 'excellent' rating.
In the year ended 31 December, the company generated unaudited revenue of £1.4m and incurred a small net loss of £46,000.
The board said the acquisition aligned with the Huddled strategy of building a portfolio of e-commerce brands, complementing its Discount Dragon business.
Food Circle's focus on reducing food waste by selling discounted and short-dated stock resonated with consumers seeking value in health foods.
On completion, additional working capital would be provided to Food Circle to expand its product range, deepen inventory, and enhance customer acquisition marketing.
The consideration for the acquisition comprised an initial payment of £0.1m in cash and £50,000 in shares.
An additional £50,000 in shares would be payable on the first anniversary of the acquisition, with an extra £100,000 in cash contingent on Food Circle meeting specified targets in its first 12 months post-acquisition.
Huddled Group said it had allotted 2,096,436 new shares at a price of 2.385p each to satisfy the £50,000 initial share consideration.
Those new shares were expected to be admitted to trading on AIM around 16 April, after which the total number of voting rights in the company would be 320,401,579.
"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," said chief executive officer Martin Higginson.
"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."
Higginson said Food Circle had developed important relationships with brands prioritising responsible disposal of surplus stocks, adding that it would remain a core mission for the acquired company.
"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."
At 1157 BST, shares in Huddled Group were up 9.42% at 2.85p.
Reporting by Josh White for Sharecast.com.
Huddled Group (HUD)