Lassonde Industries Inc. completes acquisition of Clement Pappas and Company, Inc.
Lassonde Industries Inc. (TSX: LAS.A) (“Lassonde”), along with members of the Pappas and Lassonde families, has completed the previously announced acquisition of Clement Pappas and Company, Inc. (“Clement Pappas”), for a total cash consideration of US$400.9 million, including a US$10.9 million preliminary adjustment to net working capital, subject to additional adjustments. Lassonde has a beneficial ownership of 70.7% of Clement Pappas. Of the remaining 29.3%, 19.3% is held by members of the Pappas family and 10.0% by members of the Lassonde family.
“The completion of the Clement Pappas transaction is a significant milestone for Lassonde,” said Pierre-Paul Lassonde, Chairman of the Board and Chief Executive Officer of Lassonde Industries Inc. “The combination brings together two leading fruit juice and drink manufacturers to form a leader in the North American market, one that will maintain its commitment to innovation, quality and integrity. We are very pleased to welcome the employees and management of Clement Pappas into the Lassonde organization.”
“The two companies are very complementary and, together, have a balanced business and well-diversified product offering,” said Jean Gattuso, Chief Operating Officer of Lassonde Industries Inc. “By leveraging the strengths of our two companies, we will be able to even better serve the current and future needs of our customers.”
“We are extremely excited to join forces with Lassonde. The combination brings us tremendous opportunity to grow our business across North America while maintaining our strong core values. It is truly rare to find a partner with such a strong fit from both a strategic and cultural perspective,” said Clement Pappas, Chief Executive Officer of Clement Pappas and Company, Inc.
The Clement Pappas acquisition, including related fees, was made for a cash price of US$414.0 million financed as follows:
- Debt financing (non-recourse to Lassonde) obtained by Clement Pappas, totalling US$253.1 million and comprised of:
- a US$230 million term loan bearing interest at a rate of LIBOR plus 5.25% with a LIBOR floor of 1.25%, maturing in 2017. This loan is subject to certain conditions and restrictive covenants; and
- US$23.1 million from a new operating line of credit of US$50 million.
An interest rate swap on the term loan will fix the interest rate for a minimum of three years on 50% of the term loan amount.
- A US$160.9 million investment in the equity of Clement Pappas of which:
- US$113.7 million was provided by Lassonde out of its cash and cash equivalents; and
- US$31.1 million was provided by members of the Pappas family and US$16.1 million by members of the Lassonde family.
As a result of the closing of the Clement Pappas acquisition, the amount held in escrow with a trust company, by virtue of the private placement of subscription receipts announced on August 5th, was received by Lassonde. As a result, the 420,000 subscription receipts were exchanged for 420,000 Class A subordinate voting shares. Under the placement, Lassonde received a net cash consideration of C$29.9 million. This amount was used to repay the loan drawn on Lassonde’s operating line of credit in order to finance part of the acquisition.
About Lassonde Industries Inc.
Lassonde Industries develops, manufactures and markets an innovative and distinctive line of fruit and vegetable juices and drinks as well as specialty food products such as fondue broth and sauces, soups, gravies, canned corn-on-the-cob, bruschetta toppings, tapenades, pestos and sauces for pasta and pizza. Lassonde Industries imports selected wines from several countries of origin for packaging and marketing purposes. It also imports olive oil. Nearly 1,300 employees contribute to the Lassonde’s its growth and to offering quality products to customers. The Class A and Class B shares of Lassonde Industries Inc. are listed on the TSX exchange.
About Clement Pappas and Company, Inc.
Clement Pappas is the second largest producer of store brand ready-to-drink fruit juices and drinks in the United States and a major producer of cranberry juices, drinks and sauces. Clement Pappas was founded in 1942 and is headquartered in Carneys Point, New Jersey. It employs 630 people and operates five production facilities located in Seabrook, New Jersey; Baltimore, Maryland; Mountain Home, North Carolina; Springdale, Arkansas and Ontario, California. It also runs a cranberry receiving station in Carver, Massachusetts.
Websites:
www.lassonde.com
www.clementpappas.com
SEDAR registration number: 00002099
Caution Concerning Forward-Looking Statements
This press release contains forward-looking statements that are based on certain assumptions. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations. Additional factors are discussed in materials filed from time to time with the securities regulatory authorities in Canada. Lassonde Industries Inc. disclaims any intention or obligation to update or revise any forward-looking statements except as required by law.