Langley, B.C. – Premium Brands Holdings Corporation has acquired Freybe Gourmet Foods Ltd. for $55 million. The deal was announced today and is expected to close soon.
Freybe Gourmet Foods, which has been a family owned operation since more than 165 years ago, manufactures premium gourmet deli meats and has annual sales of approximately $78 million. The company operates a state-of-the-art 120,000 sq.-ft. facility in Langley and produces more than 120 varieties of sausage, ham and specialty meat products..
For Premium Foods – which produces, markets and distributes branded specialty food products – the acquisition will strengthen its deli meats business platform.
“We will also be adding the Freybe name, which is one of western Canada’s oldest and most iconic local brands, to our diverse portfolio of leading specialty food brands,” says George Paleologou, Premium Brands president and CEO.
“Looking forward, we see significant opportunities to help Freybe grow its business and brand by leveraging both our deli meat platform’s sales and marketing infrastructure as well as our proprietary distribution networks in the foodservice and retail channels.”
It also works out well that Freybe’s facility has “significant unused capacity.” Premium Brands is shutting down its own Richmond, B.C.-based deli meats facility later this year and plans to shift its deli meats operation to Freybe’s site, says Paleologou.
Shifting its deli meats production to Freybe’s site instead of Premium Brands’ facilities in eastern Canada will also be more cost effective and convenient for distribution for Premium Brands.
“Furthermore,” adds Paleologou, “we intend to use Freybe’s unutilized production capacity to support our growth in the U.S. through our Ferndale, Wash.-based business Hempler Foods Group.”
The Freybe management team, including president and CEO Sven Freybe, will be staying on. For the Freybe family the acquisition is a way to help the company “in the next stage of its evolution,” reports 680News.com.
The purchase price of $55 million will be subject to adjustments that could raise or lower that amount. In addition, the purchase price will be increased by up to $1.25 million per year for each of the next four years if Freybe is able to achieve certain performance targets.
Premium Brands says it will fund the transaction through draws on its senior credit facilities. In conjunction with the transaction, Premium Brands negotiated a $15 million increase in the credit available under these facilities.
The transaction is expected to be immediately accretive to both Premium Brands’ earnings per share and free cash flow per share.
In addition, reports 680News.com, Premium expects to sell the Freybe’s manufacturing plant to a limited partnership after the deal closes and lease back the facilities. Premium Brands says it will receive $22.8 million in net cash from the side deal and own 35 per cent of the limited partnership that buys the plant.
Premium Brands owns a broad range of leading specialty food manufacturing and differentiated food distribution businesses with operations in B.C., Alberta, Saskatchewan, Manitoba, Ontario, Quebec, Nevada and Washington State. The company’s family of brands and businesses include Grimm’s, Harvest, McSweeney’s, Bread Garden Go, Hygaard, Hempler’s, Quality Fast Foods, Gloria’s The Best of Fresh, Direct Plus, National Direct-to-Store Distribution (NDSD), Harlan Fairbanks, Creekside Bakehouse, Centennial Foodservice, B&C Food Distribution, Shahir, Duso’s, Maximum Seafood, SK Food Group, OvenPride, Hub City Fisheries, Audrey’s, Deli Chef and Piller’s.