VANCOUVER, BC – Premium Brands Holdings Corporation has signed an agreement to purchase all assets and operating divisions of Waterloo, Ontario-based Piller Sausages & Delicatessens Limited.

Piller is one of Canada’s leading specialty European deli meats processors with annual sales of approximately $180 million (US$184 million) and it employs more 600 people. It is currently owned and operated by the Huber family who founded it in 1957. The purchase is expected to close later this month.

"This transaction will create a national deli-meats platform that will feature two of Canada’s most-respected deli brands: Grimm’s in the west and Piller in the east,” said George Paleologou, president and CEO of Premium Brands. “Piller’s will be our third major investment in Ontario in the last 12 months and will provide us with production capabilities, product research and development expertise and a proven management team that has been able to generate consistent profitable growth for many years.

The purchase price will consist of $73.7 million (US$75.4 million) in cash and 1,968,750 Premium Brands shares. In addition, it will be increased by up to $10 million (US$10.2 million) if Piller’s is able to achieve certain profitability targets over the next two years. This additional consideration, if applicable, would be payable 26 months after the closing of the transaction.

The cash portion of the purchase price will be reduced to the extent that Premium Brands assumes any funded debt and will also be subject to adjustment if Piller’s net working capital at closing is above or below a defined normalized level.

Included in the transaction is approximately 24 acres of valuable industrial land that can be used for future expansion of Piller’s business.

Premium Brands will fund the transaction through draws on its senior credit facilities. In conjunction with the transaction, Premium Brands negotiated a $56 million (US$57 million) increase in the credit available under these facilities.

Piller’s currently has an annual EBITDA run rate of approximately $15 million (US$15.3 million). Within the next two years, Premium Brands expects this to exceed $20 million (US$20.5 million) as growth and cost synergies are realized.

The transaction is expected to be immediately accretive to both Premium Brands’ earnings per share and free cash flow per share.

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, Washington State and Nevada. The company services more than 26,000 customers.