Transaction will strengthen Lassonde's
position in the specialty food segment
Conference Call to
Discuss Acquisition:
|
|
|
OPEN
TO:
|
Investors, analysts,
and all interested parties
|
|
|
DATE:
|
Friday, June 21,
2024
|
|
|
TIME:
|
8:30 a.m. ET
|
|
|
CALL:
|
1-844-763-8274 (for
North American participants);
|
|
1-647-484-8814 (for
international participants)
|
A live audio broadcast of the conference call will be available
on the Corporation's website, on the Investors page or here:
https://www.gowebcasting.com/13363. A replay of the webcast will
remain available at the same link until midnight, June 28, 2024.
ROUGEMONT, QC, June 21,
2024 /CNW/ - Lassonde Industries Inc. (TSX: LAS.A)
("Lassonde" or the "Corporation") has entered into a definitive
agreement, through one of its U.S. subsidiaries, with Mr.
Thomas Zidian and members of his
family to acquire The Zidian Group, which operates Summer Garden
Food Manufacturing ("Summer Garden"), a U.S.-based manufacturer and
distributor of specialty food, for a consideration of US$235.0 million, payable at closing. By way of
additional consideration, a further amount of up to US$45.0 million may be payable over the next
three years, should certain financial targets be achieved and other
conditions met.

Located in Boardman, Ohio, and
employing approximately 200 people, Summer
Garden develops, manufactures and markets a wide range of
premium sauces and condiments, including tomato and cream-based
pasta sauces, BBQ sauces, dipping sauces and dressings. Its
portfolio consists of approximately 250 products sold through more
than 20,000 locations under the Gia Russa and Little
Italy in the Bronx brands and under the G
Hughes brand, a leader in the U.S. sugar-free BBQ sauce
segment. Summer Garden also acts as
a co-packer for well-known brands.
"The acquisition of Summer Garden
supports our ambition to become a more diversified North American
food and beverage company," said Nathalie
Lassonde, Chief Executive Officer and Vice-Chair of the
Board of Directors of Lassonde Industries Inc. "Growing our
specialty food activities is one of Lassonde's key strategic
objectives and we are happy to have found the right company to help
us achieve this objective. Our culture and values align with those
of Summer Garden, which is also a
multi-generational family business, with an entrepreneurial spirit
and strong commitment to its employees, customers, consumers and
the communities in which it operates. We are looking forward to
closing the transaction and welcoming new talented employees to the
Lassonde organization."
Transaction Details
- For the 12-month period ending in May
2024, Summer Garden generated
sales of US$148.0 million and
adjusted EBITDA1 of approximately US$27.9 million;
- The purchase price is US$235.0
million payable in cash at closing, on a cash-free debt-free
basis and is subject to customary balance sheet adjustments and
other related adjustments;
- An amount of up to US$45.0
million may be payable in various instalments over the next
three years, should certain financial targets be achieved and other
conditions met;
- The transaction structure will allow the Corporation to
generate a benefit amounting to approximately US$30.0 million, on a net present value basis,
related to the tax deductibility of this investment;
- The transaction is expected to be accretive to margins and
earnings before synergy considerations. The acquisition's internal
rate of return is expected to be higher than the Corporation's
weighted average cost of capital;
- The transaction is not subject to a financing condition and
will be financed through the Corporation's available credit
facilities;
- Pro forma net debt to adjusted EBITDA1 ratio at
closing is expected to be under 2.20:1, leaving sufficient headroom
to continue the deployment of the Corporation's strategy;
- The transaction is subject to regulatory clearance and other
closing conditions specified in the acquisition agreement and is
expected to close within 30 to 45 days.
"We are excited with the expansion of our specialty food
activities by adding a product portfolio, and capabilities that
delivers an immediate path to growth at attractive and accretive
margins," added Vince Timpano, President and Chief Operating
Officer, Lassonde Industries Inc. "It marks another important step
in the execution of our long-term strategy and moves us closer to
achieving our objective of $3 billion
in sales with further margin improvement. Through brands that hold
growth potential in their categories, Summer Garden expands our core offering in pasta
sauces and extends our reach into new adjacencies. We are also
integrating high-quality assets into our network, including
additional retort capabilities, to position ourselves as the
manufacturer of choice for our customers. Finally, with cash flow
generation to support future expansion, we view this transaction as
the creation of a new growth platform for Lassonde."
"This partnership ensures our legacy will continue to thrive,"
said Thomas Zidian, President and
Chief Executive Officer of Summer
Garden. "We are confident it will benefit our customers
through enhanced products and will offer our employees new
opportunities for development and advancement. We also believe the
values which have guided the Zidian family business from the start
will continue to be the guiding principles under the stewardship of
Lassonde Industries, Inc."
Canaccord Genuity / CG Sawaya Partners served as exclusive
financial advisor to Lassonde and Brown Gibbons Lang & Company
served as exclusive financial advisor to The Zidian Group.
Financial Measures Not in Accordance With IFRS
The financial measures or ratios, further described below, do
not constitute standardized financial measures or ratios in
accordance with the financial reporting framework used to prepare
the Corporation's financial statements. These non-IFRS measures
should not be considered in isolation or as a substitute for
financial measures prepared in accordance with IFRS. Comparing them
to similar financial measures or ratios presented by other issuers
may not be possible.
EBITDA and Adjusted EBITDA
EBITDA is a financial measure used by the Corporation and
investors to assess the Corporation's capacity to generate future
cash flows from operating activities and pay financial expenses.
Adjusted EBITDA is a financial measure used by the Corporation to
compare EBITDA between periods by excluding items impacting
comparability. EBITDA consists of the sum of operating profit and
of the "depreciation of property, plant and equipment and
amortization of intangible assets" item and "(Gains) losses on
capital assets" item, as shown in the Consolidated Statement of
Cash Flows. Adjusted EBITDA is calculated by adjusting the EBITDA
with items considered by management as impacting the comparability
between periods.
Net Debt to Adjusted EBITDA
Net debt to adjusted EBITDA is a financial measure used by the
Corporation to assess its ability to pay off existing debt and
define available borrowing capacity. To calculate the net debt to
adjusted EBITDA ratio, net debt is divided by the sum of adjusted
EBITDA from the last four quarters. Net debt represents long-term
debt, including the current portion, less the "Cash and cash
equivalents" item, as they are presented in the Corporation's
Consolidated Statement of Financial Position.
About Summer Garden
Based in Boardman, Ohio,
Summer Garden operates out of a
10-acre campus consisting of a Green LEED certified manufacturing
facility with research & development and production
capabilities, including high-acid and low-acid (retort)
manufacturing capabilities. Summer
Garden is an owned subsidiary of The Zidian Group, a
family-owned, manufacturer, marketer, and distributor of premium
sauces, including BBQ sauces and pasta sauces, as well as dipping
sauces, marinades, dressings, and other shelf-stable products. The
business' owned brands include the leading sugar-free BBQ sauce
brand, G Hughes, as well as the Gia Russa and
Little Italy in the
Bronx brands. It is also a
recognized and trusted co-packer for well-known and growing
brands.
About Lassonde
Lassonde Industries Inc. is a leader in the food and beverages
industry in North America. The
Corporation develops, manufactures, and markets a wide range of
private label and national brand products, including ready-to-drink
beverages, fruit-based snacks as well as frozen juice concentrates.
It is also a leading producer of cranberry sauces and specialty
food products such as pasta sauces, soups and fondue broths and
sauces. The Corporation also produces, imports and markets selected
wines from several countries of origin and produces and markets
apple cider and cider-based drinks.
The Corporation is active in two market segments:
- Retail sales consist of sales to food retailers and wholesalers
such as supermarket chains, independent grocers, superstores,
warehouse clubs, major pharmacy chains; and
- Food service sales consist of sales to restaurants, hotels,
hospitals, schools, and wholesalers serving these
institutions.
The Corporation operates 18 plants located in Canada and the
United States and produces its superior quality products
through the expertise of over 2,700 full-time equivalent employees.
To learn more, visit www.lassonde.com.
Caution Concerning Forward-Looking Statements
This document contains "forward-looking information" and the
Corporation's oral and written public communications that do not
constitute historical fact may be deemed to be "forward-looking
information" within the meaning of applicable Canadian securities
law. These forward-looking statements include, but are not limited
to, statements on the Corporation's objectives and goals and are
based on current expectations, projections, beliefs, judgments, and
assumptions based on information available at the time the
applicable forward-looking statement was made and considering the
Corporation's experience combined with its perception of historical
trends.
Forward-looking statements are typically identified by words
such as "anticipate", "continue", "estimate", "expect", "may",
"will", "project", "should", "could", "would", "believe", "plan",
"intend", "design", "target", "objective", "strategy", "likely",
"potential", "outlook", "aim", "goal", and similar expressions
suggesting future events or future performance in addition to the
negative forms of these terms or any variations thereof. All
statements other than statements of historical fact included in
this document may constitute a forward-looking statement.
Various factors or assumptions are applied by the Corporation in
elaborating the forward–looking statements. These factors and
assumptions are based on information currently available to the
Corporation, including information obtained by the Corporation from
third parties. Readers are cautioned that the assumptions
considered by the Corporation to support these forward-looking
statements may prove to be incorrect in whole or in part.
The significant factors that could cause actual results to
differ materially from the conclusions, forecasts or projections
reflected in the forward-looking statements contained herein
include, among other things, risks associated with the following:
deterioration of general macroeconomic conditions, including
international conflicts, which can lead to negative impacts on the
Corporation's suppliers, customers, and operating costs; the
availability of raw materials and packaging and related price
variations (including the prices of orange juice and orange
concentrates, key commodities for the Corporation, which have
continued to trade above historical highs for the past several
months and show no sign of favourable change); loss of key
suppliers or supplier concentration; disruptions in or failures of
the Corporation's information technology systems, as well as the
development and performance of technology; cyber threats and other
information-technology-related risks leading to business
disruptions, confidentiality, data integrity, and business email
compromise-related fraud; the successful deployment of
the Corporation's multi-year strategy (defined in Section 4 -
"Multi-Year Strategy" of the Corporation's MD&A for the first
quarter ended March 30, 2024); the
Corporation's ability to maintain strong sourcing and manufacturing
platforms and efficient distribution channels; fluctuations in the
prices of inbound and outbound freight, the impact of oil prices
(and derivatives thereof) on the Corporation's direct and indirect
costs along with the Corporation's ability to transfer those
increases through higher prices or other means, if any, to its
customers in competitive market conditions and considering demand
elasticity; climate change and disasters causing higher operating
costs and capital expenditures and reduced production output, or
impacting the availability, quality or price volatility of key
commodities sourced by the Corporation; the scarcity of labour and
the related impact on the hiring, training, developing, retaining
and reliance of personnel together with their productivity,
employment matters, compliance with employment laws across multiple
jurisdictions, and the potential for work stoppages due to
non-renewal of collective bargaining agreements or other reasons;
the successful deployment of the Corporation's health and safety
programs in compliance with applicable laws and regulations;
serious injuries or fatalities, which could have a material impact
on the Corporation's business continuity and reputation and lead to
compliance-related costs; disputes with significant suppliers; the
increasing concentration of customers in the food industry,
providing them with significant bargaining power particularly on
the Corporation's selling prices; the implementation, cost and
impact of environmental sustainability initiatives as well as the
cost of remediating environmental liabilities; changes made to laws
and rules that affect the Corporation's activities, particularly in
matters of tax and customs duties, as well as the interpretation
thereof, and new positions adopted by relevant authorities; the
ability to adapt to changes and developments affecting the
Corporation's industry, including customer preferences, tastes, and
buying patterns, market conditions and the activities of
competitors and customers; failure to maintain the quality and
safety of the Corporation's products, which could result in product
recalls and product liability claims for misbranded, adulterated,
contaminated, or spoiled food products, along with reputational
damage; risks related to fluctuations in interest rates, currency
exchange rates, liquidity and credit, stock price and pension
obligations; the incurrence of restructuring, disposal, or other
related charges together with the recognition of impairment charges
on goodwill or long-lived assets; the sufficiency of insurance
coverage; and the implications and outcome of potential legal
actions, litigation or regulatory proceedings to which the
Corporation may be a party. The Corporation cautions readers that
the foregoing list of factors is not exhaustive.
The Corporation's ability to achieve its sustainability targets
and goals is further subject to, among other factors, its ability
to access and implement all technology necessary to achieve them as
well as the development, deployment and performance of technology
and environmental regulation. The Corporation's ability to achieve
its environmental, social and governance risk commitments is
further subject to, among other factors, its ability to leverage
its supplier relationships.
The assumptions, expectations, and estimates involved in
preparing forward-looking statements and risks and uncertainties
that could cause actual results to differ materially from
forward-looking statements are discussed in the Corporation's
materials filed with the Canadian securities regulatory authorities
from time to time, including information about risk factors that
can be found in Section 19 - "Uncertainties and Principal Risk
Factors" of the Corporation's MD&A for the year ended
December 31, 2023. Readers should
review this section in detail.
All forward-looking statements included herein speak only as of
the date hereof. Unless required by law, the Corporation does not
undertake any obligation to publicly update or revise
forward-looking statements, whether as a result of new information,
future events, or otherwise. All forward-looking statements
contained herein are wholly and expressly qualified by this
cautionary statement.
1
|
This measure does not
constitute a standardized financial measure in accordance with the
financial reporting framework used to prepare the Corporation's
financial statements. Comparing it to a similar financial measure
presented by other issuers may not be possible. Refer to
Section "Financial Measures Not in Accordance with
IFRS" of this press release for more information, including the
definition and composition of the measure or ratio as well as the
reconciliation to the most comparable measure in the financial
statements, as applicable.
|
SOURCE Industries Lassonde inc.