VANCOUVER – Premium Brands Holdings Corporation (TSX: PBH), a leading producer, marketer and distributor of branded specialty food products, announced today that its Washington based subsidiary, Hempler Foods Group LLC (Hempler's) has entered into an agreement to acquire the business and certain assets of Washington based Fletcher's Fine Foods (Fletcher's US). The transaction is expected to close in September 2016 and is subject to customary conditions.
Fletcher's US, which sells a variety of premium bacon and fresh sausage products in the U.S. Pacific Northwest under the Fletcher's brand, has annual sales of approximately US$17 million. It was founded by a predecessor of Premium Brands in 1985 then later sold as part of a larger transaction in 2004. Under the terms of the transaction, Hempler's will be purchasing Fletcher's US's business and production equipment but not its plant in Algona, WA. Correspondingly, Hempler's will be transferring production of Fletcher's US's products to other manufacturing facilities in the US including its plants in Ferndale, WA and Kent, WA.
"This transaction fits perfectly with our strategy of investing in companies with strong regional brands then providing their talented management teams with the resources needed to further strengthen their business and help accelerate their growth," said Mr. George Paleologou, President and CEO. "Furthermore, this transaction brings together three of the U.S. Pacific Northwest's most iconic specialty packaged meat brands, namely Hempler's, Fletcher's, and Isernio's, which we acquired just last year. All of these brands are known for their authentic, top quality, specialty products and their long histories of community engagement and charitable giving," added Mr. Paleologou.
"I am very pleased to have Fletcher's US join our family of lead brands," said Mr. Stephen Bates, President of Hempler's. "Earlier in my career I was a proud member of the Fletcher's US organization and I am very excited about once again playing a part in the growth and development of the Fletcher's US brand."
Financial Details
The purchase price under the terms of the transaction is US$5.0 million, which will be adjusted if Fletcher's US's net working capital at closing is above or below a defined normalized level.
The transaction is expected to be immediately accretive to both Premium Brands' earnings per share and free cash flow per share.
ABOUT PREMIUM BRANDS
Premium Brands owns a broad range of leading specialty food manufacturing and differentiated food distribution businesses with operations in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, Nevada, Ohio and Washington State. The Company services a diverse base of customers located across North America and its family of brands and businesses include Grimm's, Harvest, McSweeney's, Piller's, Freybe, Expresco, Hempler's, Isernio's, Direct Plus, SK Food Group, OvenPride, Audrey's, Bread Garden Go, Hygaard, Quality Fast Foods, Deli Chef, Creekside Bakehouse, Stuyver's Bakestudio, Gourmet Chef, Duso's, Centennial Foodservice, B&C Food Distributors, Shahir, Wescadia, Harlan Fairbanks, Maximum Seafood, Ocean Miracle, Hub City Fisheries, C&C Packing and Premier Meats.
FORWARD LOOKING STATEMENTS
This press release contains forward looking statements with respect to the Company, including its business operations, strategy and financial performance and condition. These statements generally can be identified by the use of forward looking words such as "may", "could", "should", "would", "will", "expect", "intend", "plan", "estimate", "project", "anticipate", "believe" or "continue", or the negative thereof or similar variations.
Although management believes that the expectations reflected in such forward looking statements are reasonable and represent the Company's internal expectations and belief as of August 15, 2016, such statements involve unknown risks and uncertainties beyond the Company's control which may cause its actual performance and results in future periods to differ materially from any estimates or projections of future performance or results expressed or implied by such forward looking statements.
Some of the factors that could affect future results and could cause results to differ materially from those expressed in the forward-looking statements contained herein include: (i) changes in the cost of raw materials used in the production of the Company's products; (ii) seasonal and/or weather related fluctuations in the Company's sales; (iii) changes in consumer discretionary spending resulting from changes in economic conditions and/or general consumer confidence levels; (iv) changes in the cost of finished products sourced from third party manufacturers; (v) changes in the Company's relationships with its larger customers; (vi) access to commodity raw materials; (vii) potential liabilities and expenses resulting from defects in the Company's products; (viii) changes in consumer food product preferences; (ix) competition from other food manufacturers and distributors; * execution risk associated with the Company's growth and business restructuring initiatives; (xi) risks associated with the Company's business acquisition strategies; (xii) changes in the value of the Canadian dollar relative to the U.S. dollar; (xiii) new government regulations affecting the Company's business and operations; (xiv) the Company's ability to raise the capital needed to fund its growth initiatives; (xv) labor related issues including potential disputes with employees represented by labor unions and labor shortages; (xvi) the loss and/or inability to attract key senior personnel; (xvii) fluctuations in the interest rates associated with the Company's funded debt; (xviii) failure or breach of the Company's information systems; (xix) financial exposure resulting from credit extended to the Company's customers; (xx) the malfunction of critical equipment used in the Company's operations; (xxi) livestock health issues; (xxii) international trade issues; and (xxiii) changes in environmental, health and safety standards. Details on these risk factors as well as other factors can be found in the Company's 2015 MD&A, which is filed electronically through SEDAR and is available online at www.sedar.com.
Unless otherwise indicated, the forward looking statements in this document are made as of August 15, 2016 and, except as required by applicable law, will not be publicly updated or revised. This cautionary statement expressly qualifies the forward looking statements in this press release.
Source: Premium Brands
