Two biggest meal kit companies become one

Meal kits sold by Fresh Easy [FRESH EASY]

The two biggest meal kit manufacturers merged, creating a new colossus in the home meal replacement (HMR) business.

Fresh Easy, the biggest meal kit maker by revenue, announced Wednesday it acquired an undisclosed stake of Tasty9 for 100 billion won ($83.5 million). Tasty9 is the second biggest meal kit company in Korea.

Meal kits contain pre-portioned ingredients and seasonings to make a specific dish. HMR is a wider umbrella, referring to substitutes for home-cooking that include ready-to-eat meals and meal kits.

Current Tasty9 CEO Hong Ju-yeol will continue to lead his company after the acquisition, and will become a co-CEO of Fresh Easy.

Although both brands are meal kit companies, Fresh Easy partners with food companies and restaurants to convert their dishes into meal kits. Tasty9 creates meal kits on its own, and has developed 400 varieties since it started in 2015.

Fresh Easy is planning to distribute its products to gyms and PC bang (internet cafes), and it expects Tasty9's experience in running 35 retail stores to help. It only sells meal kits online, at department stores and at discount stores.

Fresh Easy has been aggressively expanding partnerships with other companies in the past few months.

The company had a share swap deal with another meal kit maker, Doctor Kitchen, last November. More share swaps followed in early January with chicken breast manufacturer Heo Dak and logistics firm Line Logistics System, although the company said specific stakes and investment amounts will be disclosed later.

"This M&A [merger and acquisition] is significant because it is a merger between the top two meal kit companies," Fresh Easy said in a statement Wednesday. "We will solidify our position in the home meal replacement market from this partnership with the No. 1 and No. 2 companies, and drive innovation in the food industry."

The company plans to go public sometime in 2023.

BY LEE TAE-HEE [lee.taehee2@joongang.co.kr]