New documents reveal what happened in June when Norwegian venture capital firm Herkules entered as giant owners in the Swedish e-commerce startup.
Founders Lina Gebäck and Niklas Aronsson tried to sell Linas Matkasse the entire spring, which Breakit have written extensively about. Among proposed buyers were grocery store giant Axfood and German Grocery bag giant Hello Fresh.
When bidders were invited for the final round it was under the notice that at least $90 million was required to partake in the process. This made Axfood and Hello Fresh to back out – the price tag was simply too high.
The founders of Linas Matkasse chose another direction then. In July, Norwegian venture capital firm Herkules Capital confirmed that they had invested in the Swedish e-commerce startup. Herkules usually want to own a majority of shares in their portfolio companies but in this case they settled for 30 percent.
Herkules did not at that time wish to reveal whether it was new issue of shares or an acquisition of existing shares. Breakit’s sources revealed however that the company was valued at $108 million.
Parties have filed documents to Bolagsverket which shed new light on the deal. According to the documents, Herkules invested a total of $32 million in the company owning LinasMatkasse, through two new issues of shares. It was not a purchase of existing shares. In other words, the money is injected into the company. The preexisting owners didn’t cash in on the deal.
Even more interesting: The Norwegians managed to take control over the e-commerce group through a cunning construction, even though they only own 30 percent.
This is what the set-up looks like: Herkules own 64 percent of the company Kullstenen Topco while the rest of shares are owned by Niklas Aronsson and Carolina Gebäck.
Kullsten Topco in turn owns 55 percent of the similarly named Kullstenen Holdco – the company where Linas Matkasse’s business lies. In that way, the e-commerce group is practically run by Herkules, since Herkules control the biggest stock holder.
The former investors, venture capital firm Creandum and Acton Capital, holds no shares in the power company Kullstenen Topco, and thus have very limited influence over the company. They do however own shares in Kullstenen Holdco.
It sounds complicated, doesn’t it? Here’s the big picture: Herkules, which holds the right to appoint the company chair, has a firm grip of the power in one of Sweden’s fastest growing e-commerce companies. The next step for the company might be an IPO. Earlier this year Herkules partner Sverre Flåskjer, told Breakit that the company is well suited for an IPO(article in Swedish).
Herkules has declined to comment.
After several attempts to reach Linas Matkasse on Tuesday, Niklas Aronsson describes his take on the situation in an e-mail to Breakit.
Here is his response:
“We had a few challenges this summer when it came to the deal. It was important for us as founders to still be the biggest share holders in the company. Earlier investors (Acton and Creandum) were clear with their intention to stay in the company as everyone with inside knowledge understood how much more we have to give. When an investor like Herkules, which usually takes a majority of shares, realized that they will have to settle with far less, everyone had to sit down together and get creative so that all parties would feel that their needs was seen to.”
Regarding the stock issues and the $32 million, he said this:
“I will not comment on the numbers you are reporting except for that we feel well suited for taking advantage of the possibilities in Sweden, Norway, the Netherlands and other potential markets where we see an opportunity to do a good job.”