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SunOpta to acquire Sunrise Holdings for $450 million

Staff writer |
SunOpta signed a definitive agreement to acquire Sunrise Holdings from an investor group led by affiliates of Paine & Partners. The transaction is valued at approximately $450 million.

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Sunrise Growers is a supplier of private label domestic and imported conventional and organic frozen fruit and complements SunOpta's existing frozen fruit and fruit ingredient businesses.

This transaction positions the combined operation as a global leader in the rapidly growing frozen fruit category.

Sunrise Growers generates approximately $300 million in annualized revenues, supplying a diverse base of retail and foodservice customers from its facilities in California, Kansas and Mexico.

The acquisition of Sunrise Growers fits SunOpta's disciplined acquisition strategy and is expected to leverage the company's integrated field to table business model and enhance its overall margin profile.

SunOpta expects to realize over $10 million in procurement, logistical and other operating synergies by the end of 2017.

The addition of Sunrise Growers is expected to be approximately $0.04 and $0.05 accretive to Adjusted Earnings Per Share in fiscal 2016 and 2017, respectively, which excludes transaction and integration-related costs and certain one-time purchase accounting expenses.

The acquisition is expected to be accretive to Adjusted Cash Earnings Per Share by approximately $0.10 and $0.11 in fiscal 2016 and 2017, respectively, which excludes transaction and integration-related costs.

SunOpta expects to complete the transaction in the fall of 2015, subject to regulatory approval and customary closing conditions.

SunOpta intends to finance the acquisition through a combination of debt and equity financing. Bank of Montreal and BMO Capital Markets have provided committed financing in support of the transaction, subject to customary conditions.

Following the transaction, SunOpta expects to continue to have access to capital to support further acquisitions and strategic growth initiatives, aided by a strong balance sheet and expanded free cash flow expected from the combined business.

After giving effect to the acquisition and related financing, SunOpta expects to have a prudent level of leverage at approximately 5 times pro forma EBITDA within its core foods business. SunOpta expects its core foods business to de-lever 1.0 to 1.5 times over the first 18 months following the acquisition.

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