We might end up selling the company

With industry sales appearing to stagnate and the stock price of longtime competitor Beyond Meat (BYND) falling, Impossible Foods now believes a high-profile IPO may not be the best idea for its investors.

The alternative: a sale of the entire company within a few years.

“It’s an option,” Impossible Foods CEO Peter McGuinness said on Yahoo Finance’s Opening Bid podcast when asked about a sale (watch the video above or listen here ). “And it could allow Impossible to be in more places and accomplish 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 that oft-discussed IPO, but the idea of ​​a sale is another step in the plant-based meat maker’s end game.

The company’s last capital raising was $500 million in November 2021.

McGuinness acknowledged that Impossible Foods, founded in 2011 by Dr. Pat Brown, is not yet profitable despite some layoffs. The losses reflect a decline 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 sufficient cash to operate its business, and no decisions regarding a sale, IPO or capital raise have been made.

“We might talk about it in more detail in a year or two. But right now it’s about improving the fundamentals, getting the distribution, getting the awareness, getting the food better. I know it sounds basic and boring, but it works. It’s a playbook that works,” McGuinness added.

Impossible doesn’t have to look far to see what an IPO could bring.

Its rival Beyond Meat burst onto the public scene on May 5, 2019, with a meteoric initial public offering on the Nasdaq.

Investors devoured shares of a company they considered the leader in the plant-based food space. The company priced its IPO at $25 a share, opened at $46, then jumped to $65.75 by the close. It closed up 163%.

From there, it’s been a whirlwind of activity for Beyond Meat, with big deals with global restaurant chains like KFC (YUM) and Dunkin’ Donuts, plans to expand into refrigerated food sections at Target (TGT) and retailers overseas, and efforts to increase manufacturing capacity and create new plant-based items.

In July 2019, Beyond Meat shares reached a high of $234.90 per share.

However, the COVID-19 pandemic has hit the restaurant industry hard and its financial consequences have pushed people to turn to cheaper meat products in supermarkets.

The story continues

Beyond Meat’s impressive momentum has stalled, as has Impossible Foods, which had expanded into restaurants such as Burger King (QSR) and retail stores.

Along the way, attacks on the healthiness of plant-based products from meat industry insiders and the media have damaged Beyond Meat and Impossible Foods’ reputations with consumers. In November 2022, as losses ate into 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.

Retail sales of plant-based foods are expected to reach $8.1 billion in 2023, up from $8.2 billion in 2022, according to a report from the Good Food Institute.

Beyond Meat stock price today: $6.97.

McGuinness did not disclose Impossible Foods’ valuation, but it is likely lower than the $7 billion it reached in its 2021 funding round.

According to McGuinness, “the category is not where it needs to be. So investors are pretty cautious right now.”

Target (TGT) needs to get its act together, retail expert Jeff Macke told me. Listen to his thesis on the auction opening below.

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