The companies will combine as the “Tattooed Chef”

Forum Merger Corp. II (FMCI), announced this morning that they have signed a definitive business combination agreement with Ittella International, a plant-based food company with a broad portfolio of products available both in private label and the Company’s “Tattooed Chef” brand.  Itella and Forum will combine as Tattooed Chef, Inc. with an anticipated initial enterprise value of approximately $482 million, 2.2x Tattooed Chef’s estimated 2021 revenue of $222 million, or 15.6x Tattooed Chef’s estimated 2021 Adjusted EBITDA of $30.8 million.

Tattooed Chef Investment Highlights

• High growth and innovative plant-based food company with an established brand as well as a private label presence, serving leading national retailers, with significant growth opportunities through expanded distribution to new and existing customers
• Large addressable market in the $55 billion U.S. frozen food category where plant-based products are rapidly expanding share
• Strong product positioning aligned with major consumer trends
• Diverse portfolio of plant-based products with a proven innovation track record of creating great tasting, unique flavor profiles that allow consumers to connect with a plant-based lifestyle
• Passionate management team with deep food industry expertise
• Compelling financial profile
  • Projected $148 million and $222 million in revenue and $17 million and $31 million in Adjusted EBITDA in 2020 and 2021, respectively
  • Projected 2018-2021 revenue compounded annual growth rate of 67%
  • Anticipated initial enterprise value of approximately $482 million implying a 2.2x and 15.6x multiple of projected 2021 revenue and Adjusted EBITDA, respectively

Tattooed Chef will be led by Sam Galletti, President and CEO, Stephanie Dieckmann, COO and CFO, and Sarah Galletti, the creator of Tattooed Chef and Creative Director. The Company intends to split the roles of CFO and COO and has initiated a search for a new CFO. Stephanie Dieckmann will continue to serve both roles until a new CFO has been appointed.

Key Transaction Terms and Conditions

In connection with the transaction, the Company’s current shareholders are retaining 80% of their equity, which will convert into 60% of the outstanding shares of the combined company at closing, assuming no redemptions by Forum’s public stockholders. After giving effect to any redemptions by the public stockholders of Forum, the balance of the approximately $200 million in cash held in Forum’s trust account will be used to pay cash consideration to the Company’s shareholders and transaction expenses, with the remainder staying on the balance sheet to fund the combined company’s growth and for general corporate purposes. The Company’s current shareholders will have the potential to receive an earnout, payable in the form of Tattooed Chef common stock, if certain Tattooed Chef stock price targets are met, as set forth in the definitive agreement.

The transaction is expected to close in the third quarter of 2020.

Quick takes: There has been huge speculation as to what company FMCI was going to buy.  Impossible Foods, being one….which sort of seemed “impossible”.  But the Tattooed Chef has a great product offering and plant-based foods are a hot and growing sector.  In fact, FMCI provided a handy benchmarking page in their presentation (page 26) that shows based on the last twelve months the Tattooed Chef racked up $102.1 million in net sales versus Beyond Meat’s $87.9 million, which is helpful to get a sense of scale for this company.  And if we look at the EV/EBITDA multiples, Beyond Meat shows 126.8x versus Top Chef’s 15.6x.  The rest of the comps do not have as stratospheric multiples, but it still feels like a solid discount was built into this transaction. Plus, I’ve tried the Beyond Burger and didn’t love it, but I would absolutely try some of the meals they show in the presentation and I like the greater variety in product offering. And frankly, the logo is pretty cool too.  Sounds like FMCI cooked up a winner.

ADVISORS

• Harrison Co. acted as financial advisor to Ittella International.
• Rutan & Tucker, LLP served as legal counsel to Ittella International.
• Jefferies LLC served as lead financial advisor and capital markets advisor to Forum.
• EarlyBirdCapital, Inc. served as financial advisor to Forum.
• Winston & Strawn LLP served as legal counsel to Forum.