The Executive Board of Royal Wessanen nv (Wessanen) announces that it has reached agreement with Kehe Food Distributors, Inc. (Kehe) on the sale and purchase of Tree of Life, Inc. and all but one of its subsidiaries (Tree of Life) for a cash consideration of USD 190 million (EUR 133 million) on a cash and debt free basis and subject to certain adjustments on closing. Panos Brands LLC has been excluded from the sale.
The net proceeds of the sale will be used to reduce Wessanens debt and strengthen its balance sheet to support growth of its European businesses. The transaction is expected to close in the first quarter of 2010.
The management of Tree of Life is expected to stay. In view of this, Richard Lane, President and CEO of Tree of Life, has stepped down as Executive Board member of Wessanen, effective immediately.
Frans Koffrie, Wessanen CEO, commented: For Wessanen this is a major step in its strategic transition to a group focused on European organic and specialty food markets. Earlier this year we announced reviews to exit our North American branded and distribution businesses. With the earlier divestment of Liberty Richter and now Tree of Life, good progress has been made toward this strategic focus. In combination with a strengthened balance sheet, we are well-positioned to benefit in full from the ample opportunities of the European organic and specialty food markets.
We are pleased to have found a good home for Tree of Life and its employees, whom I would like to thank for their efforts and commitment over the years. On behalf of the Executive Board, I thank Richard for the invaluable experience he brought to our North-American operations and for his successful leadership of Tree of Life, and I wish him every success in the future.
The transaction price of USD 190 million is subject to a normal working capital adjustment and potential downward adjustment depending on Tree of Lifes operating performance prior to closing. The performance related floor in the transaction price is USD 171 million. On the basis of the agreed pricing and costs associated with the transaction, Wessanen anticipates recognizing a book loss of approximately EUR 50 million after tax in the fourth quarter of 2009, excluding a net cumulative exchange loss deferred in equity.
Completion of the transaction is subject to approval by Wessanens shareholders, receipt of regulatory approvals, receipt of financing and other customary conditions. Kehe has secured commitments from banks and other financial institutions enabling Kehe to complete the transaction unless a significant deterioration in operating performance were to occur. If Kehe does not obtain final approval from its lenders financing the transaction, in most circumstances a break fee of USD 5 million is payable to Wessanen. If approval for the transaction is not obtained from Wessanens shareholders, a break fee of USD 2 million would be payable to Kehe.
Wessanen will convene an Extraordinary General Meeting of Shareholders on Wednesday 13 January 2010 to obtain the required shareholders approval, by public notice on its website and in advertisements in national papers.
Source:
Royal Wessanen
