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One of the largest packaged food companies in the world just got bigger.

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On Friday, Nestlé closed a deal to acquire Freshly, a U.S.-based meal delivery service, for $950 million.

Nestlé could also pay up to $550 million more, depending on whether Freshly hits certain growth targets, according to the announcement.

The company, which delivers healthy, prepared meals that customers just have to heat up to enjoy, is expected to make $430 million in sales this year.

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“This move brings together Nestlé's deep understanding of what and how people eat at home, and world-class research and development capabilities with Freshly's highly specialized consumer analytics platform,” the announcement said.

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Freshly was founded in 2015 and is now shipping more than 1 million meals a week to people in 48 states, according to the announcement.

Nestle acquired prepared-meal delivery service Freshly on Friday, for up to $1.5 billion. (REUTERS/Pierre Albouy)

In 2017, Nestlé bought a 16% stake in Freshly “as a strategic move to evaluate and test the burgeoning market,” Friday’s announcement said.

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By acquiring Freshly, Nestlé is positioning itself to compete with meal kit subscriptions like Blue Apron and HelloFresh even though Freshly doesn’t require any of the preparation or cooking that meal kits require.

"Consumers are embracing ecommerce and eating at home like never before,” Steve Presley, Nestlé USA’s chairman and CEO, said in a statement. “It's an evolution brought on by the pandemic but taking hold for the long term.”

“Freshly is an innovative, fast-growing, food-tech startup, and adding them to the portfolio accelerates our ability to capitalize on the new realities in the U.S. food market,” Presley added.

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In a letter to customers, Freshly founder and CEO Michael Wystrach said that the acquisition wouldn’t change the company’s meals, pricing and subscription.

“Freshly will continue to operate as a standalone business to accomplish our core mission to remove the barriers to healthy eating with convenient, nutritious and delicious meal solutions, backed by the power of Nestlé to open new doors for a fresher, faster food delivery to your door,” Wystrach wrote.

“We will continue to maintain our own strict standards and maintain complete control of our products,” Wystrach added. “Our meals will not be changing, and there are no plans to change ingredients or integrate Nestlé products into Freshly meals, but we are excited about potential opportunities for the future.”

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