Meal kit delivery service Marley Spoon has sweet-talked Martha Stewart into extending a partnership and revising the payment terms of a $US1 million fee it will pay to badge its meals with the celebrity homemaker’s name.
Marley Spoon (ASX:MMM) listed on the ASX at the start of July after raising $70 million at $1.42 a share.
The shares were up 2 per cent to $1.32 in early Monday trade. They have traded below their issue price since listing.
The German brand now operates in Australia, Europe and the US.
In Marley Spoon’s prospectus, the company highlighted that 34 per cent of its $84 million in global revenue comes from the US, but it also explained this revenue comes with a Martha Stewart partnership that costs.
In 2016, the company struck a deal with Martha Stewart’s “Living Omnimedia” business, where Marley Spoon pays royalties to Stewart to brand its US meal kits with her name.
The deal was for five years until the end of 2020, but Marley Spoon did warn investors in its prospectus that “Marley Spoon expects that it will not meet current contracted annual minimum meal kit sales volumes in the United States”, and this would entitle Martha to end the deal at the end of this year.
However, Marley Spoon confirmed this morning it had extended the partnership to 2020. The company did not outline exactly how much it pays Stewart’s business per meal sold, but the company was previously on the hook to pay $US1 million in royalties by the end of next year.
The new partnership terms means Marley Spoon will now work with Martha until 2022 and a $1 million royalty fee will be paid over smaller instalments up to the end of 2022.
Chief executive Fabian Siegel told investors in a statement the deal was good news for customers, who would continue to receive Martha Stewart’s “proven and loved” recipes in the US.
Stockhead has contacted Marley Spoon for further comment.
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