Impossible Foods Explores Sales OptionsImpossible Foods Explores Sales Options Despite a lull in sales and a depressed competitor’s stock price, Impossible Foods is considering a sale of the entire company within a few years. CEO Peter McGuinness acknowledges that a sale could expedite the company’s mission and provide investors and employees with a substantial return. Alternative Options McGuinness did not rule out a further capital raise or an IPO, but a sale is seen as another path towards the company’s goals. Impossible Foods raised $500 million in November 2021 and has since laid off a portion of its workforce due to financial losses. Challenges and Competition The plant-based meat industry has faced challenges, including a drop in demand and inefficiencies at Impossible Foods. The company faces competition from its rival, Beyond Meat, which had a successful IPO in 2019 but has since seen its stock price decline significantly. Plant-Based Food Industry Outlook According to a report by the Good Food Institute, plant-based food sales are expected to decline slightly in 2023. Impossible Foods’ valuation is likely below the $7 billion it received in its 2021 funding round, reflecting the industry’s current state. Conclusion Impossible Foods is exploring various options for its future, including a potential sale of the company. Despite current challenges, CEO McGuinness remains optimistic about the company’s long-term prospects and believes that a sale could accelerate its mission.
With sales in the sector appearing to have stalled and the stock price of its longtime competitor, Beyond Meat (BYND), in the doldrums, Impossible Foods thinks a much-hyped IPO might not be the best idea for its investors.
The alternative: a sale of the entire company within a few years.
“It is an option,” Impossible Foods CEO Peter McGuinness said on Yahoo Finance’s Opening Bid podcast when asked about the possibility of a sale (video above or listen here ). “And that could get Impossible into more places and achieve its mission faster. Investors could get a good return and employees could get a good return on their equity.”
McGuinness also didn’t rule out a “significant” capital raise or the much-discussed IPO, but filing for a sale is another step in the plant-based meat producer’s end goal.
The company’s last capital raise was $500 million in November 2021.
McGuinness acknowledged that Impossible Foods — founded in 2011 by Dr. Pat Brown — isn’t yet profitable, despite a round of layoffs. The losses reflect a slump in demand for plant-based meat and inefficiencies at the company. The former Chobani COO has been working to improve operations since joining the company in 2022.
Impossible Foods has more than enough liquidity to continue its activities. No decision has yet been made on a sale, IPO or capital increase.
“We can talk about it more in a year or two. But right now it’s about doing the basics better, distribution, creating awareness, making the food better. I know it sounds basic and boring, but it works. It’s a playbook that works,” McGuinness added.
Joey Chestnut, winner of the 2021 Nathan’s Famous Fourth of July International Hot Dog-Eating Contest, poses for photos at Maimonides Park on Coney Island, July 4, 2021, in New York City. (AP Photo/Brittany Newman, File) (ASSOCIATED PRESS)
Impossible doesn’t have to look far to see what an IPO can yield.
Rival Beyond Meat entered the public market on May 5, 2019 with a successful IPO on the Nasdaq.
Investors gobbled up shares of a company they saw as a leader in the plant-based food industry. The company priced its IPO at $25 a share, opened at $46, and then soared to $65.75 by the close. The gain when that closing bell sounded: a whopping 163%.
From that point on, Beyond Meat has been on a meteoric rise, with major deals with international restaurant chains like KFC (YUM) and Dunkin’ Donuts, expansion plans into the refrigerated food aisles at Target (TGT) and retailers abroad, and efforts to expand production capacity and create new plant-based products.
In July 2019, Beyond Meat shares peaked at $234.90 per share.
However, the COVID-19 pandemic had a major impact on the restaurant sector and made people opt for cheaper meat products in supermarkets again.
The story continues
Beyond Meat’s impressive momentum stalled, as did Impossible Foods, which expanded into restaurants like Burger King (QSR) and into retail stores.
Along the way, attacks on the healthiness of plant-based products from meat industry incumbents and the media damaged Beyond Meat and Impossible Foods’ reputations with consumers. In November 2022, with losses eroding cash flow, Beyond Meat was forced to lay off 19% of its workforce.
In January 2023, Impossible Foods laid off approximately 20% of its workforce.
According to a report from the Good Food Institute, plant-based food sales are expected to reach $8.1 billion in 2023, down from $8.2 billion in 2022.
Beyond Meat’s stock price today: $6.97.
McGuinness did not disclose Impossible Foods’ valuation, but it is likely below the $7 billion the company received in its 2021 funding round.
McGuinness said: “The category is not where it needs to be. So investors are a bit cautious at the moment.”
Target (TGT) needs to get its act together, retail expert Jeff Macke told me. Listen to his thesis on Opening Bid below.
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