Premium Brands Income Fund Announces Acquisition Of B&C Food Distributors
Vancouver, BC - Premium Brands Income Fund a leading producer, marketer and distributor of specialty branded consumer food products announced recently that it has completed the acquisition of Vancouver Island based B&C Food Distributors Ltd. ("B&C"). The net acquisition price of approximately $7.0M, which is after expected proceeds of $5.0M from the planned sale and leaseback of B&C's warehouse and processing facility located just outside of Victoria, will consist of $5.1M in cash and the issuance of 161,988 units. The Fund will not assume any funded debt under the terms of the transaction.
With annual sales of approximately $40M to 900 independent restaurants, hotels and institutions on Vancouver Island, B&C is one of the Island's leading specialty distributors of high quality "center-of-the-plate" protein products. Its product portfolio includes a wide range of high end beef, poultry, pork and seafood items. In addition B&C has a full service custom portion cutting operation that allows it to provide customers with unique product solutions.
B&C also provides warehousing and distribution services to Vancouver Island based grocery retailers, most of which are done on a commission or cost plus basis. By selling to both foodservice and retail customers B&C is able to increase the efficiency of its operations through economies of scale.
Post the transaction, B&C will continue to operate under the highly regarded B&C banner as part of the Fund's Centennial Foodservice business. Centennial is the largest specialty distributor of high quality "center-of-the-plate" protein products in Western Canada with distribution and custom portion cutting operations in Victoria, Richmond, Kelowna, Prince George, Edmonton, Calgary, Saskatoon and Regina.
"This transaction is consistent with our strategy of strengthening our differentiated distribution networks in key markets through strategic acquisitions. The combination of B&C and Centennial's Vancouver Island operation will create a solid growth platform in one of Canada's fastest growing markets," said Mr. George Paleologou, President and CEO of Premium Brands.
"B&C is a great company that was built on many of the same fundamental principles as our company including a people focused culture and a commitment to providing customers with the highest quality products and service levels. It will be a great addition to our diverse portfolio of leading companies and we look forward to working with its strong management team to take B&C to the next level," added Mr. Paleologou.
"I have followed B&C closely for a number of years and have admired its progress and the strength of its management team. Its founder, Don Bold, along with Glenn Miskulin, B&C's General Manager, have done an excellent job in positioning B&C as the major specialty foodservice distributor on Vancouver Island," said Mr. David Carriere, President and COO of Centennial Foodservice. "I am thrilled to have the B&C organization become part of our team," added Mr. Carriere.
"I'm extremely proud of the B&C team and am confident that B&C and Centennial will be a perfect fit," said Mr. Don Bold, retired founder and majority owner of B&C. "There is no doubt in my mind that all of B&C's stakeholders, including its customers, employees and suppliers, will benefit from this transaction," added Mr. Bold.
"Looking forward, we expect to generate significant synergies from this transaction by introducing many of our unique products and brands into B&C's distribution network and vice versa; and by providing B&C with access to our global procurement capabilities, information system technologies, manufacturing expertise and financial resources," stated Mr. Paleologou.
"B&C's normalized EBITDA, after adjusting for the lease costs associated with the sale and leaseback of its warehouse and processing facility, is approximately $1.2 million per year. Based on the significant synergies associated with this transaction, we expect to double this run rate within twelve months of the acquisition," stated Will Kalutycz, CFO of Premium Brands. "Furthermore, this transaction is expected to be immediately accretive to our earnings and distributable cash."
The $5.1M cash component of the net acquisition price, which is subject to adjustment if B&C's net working capital position at closing is above or below a defined level, was funded through the Fund's existing credit facilities.
B&C's capital maintenance expenditures are expected to be in the range of $0.2M to $0.3M over the next two years.
Premium Brands owns a broad range of leading branded specialty food businesses with manufacturing and distribution facilities located in British Columbia, Alberta, Saskatchewan, Manitoba and Washington State. In addition, the Fund owns proprietary food distribution and wholesale networks through which it sells both its own products and those of third parties to approximately 25,000 customers. The Fund's family of brands includes Grimm's, Harvest, McSweeney's, Bread Garden, Hygaard, Hempler's, Quality Fresh Foods, Gloria's Fresh, Harlan's and Centennial Foodservice.
SOURCE: Premium Brands Income Fund