VANCOUVER, British Columbia – Premium Brands Holdings Corp., announced March 25 the company has acquired Freybe Gourmet Foods Ltd., a manufacturer of premium gourmet deli meats.
Premium Brands, a producer, marketer and distributor of branded specialty food products, bought Freybe for C$55 million ($53.8 million). Under terms of the deal, the purchase amount will be reduced by any debt Premium Brands assumes. Additionally, the purchase price increases by up to C$1.25 million ($1.22 million) annually for each of the next four years if Freybe is able to achieve certain performance targets.
"This transaction provides us with another leading specialty food company that further enhances the depth and strength of our deli meats business platform," said George Paleologou, president and CEO. "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. 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."
Premium Brands said it would fund the transaction through draws on its senior credit facilities. The company also negotiated a C$15 million ($14.7 million) increase in the credit available under these facilities. It expects the acquisition to immediately impact both Premium Brands' earnings per share and free cash flow per share.
The company also expects to complete the sale and leaseback of Freybe's Langley, British Columbia plant. The transaction will be a limited partnership in which Premium Brands will hold a 35 percent stake and will result in net cash proceeds of approximately C$22.8 million ($22.3 million).
Freybe reported annual sales of approximately C$78 million ($76.4 million). The company has a state-of-the-art 118,000 sq. ft. production facility located in Langley. It is currently owned and operated by the Freybe family who founded it in 1844.
"In determining who to partner with, we chose Premium Brands based on their long history of respecting the unique entrepreneurial cultures of the businesses they invest in and their commitment to producing and selling only premium quality products," said Sven Freybe, president and CEO of Freybe Gourmet Foods. "I have no doubt that Freybe will thrive under the umbrella of Premium Brands."