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Lassonde Industries to acquire Summer Garden Food Manufacturing for US$235 million

By Lassonde Industries Inc.   

News food manufacturing Lassonde Lassonde Industries Inc.

Lassonde Industries Inc. (Lassonde) has announced that it has  entered into a definitive agreement, through one of its U.S. subsidiaries, with Thomas Zidian and members of his family to acquire The Zidian Group, which operates Summer Garden Food Manufacturing (Summer Garden), a U.S.-based manufacturer and distributor of specialty food, for a consideration of US$235 million, payable at closing. By way of additional consideration, a further amount of up to US$45 million may be payable over the next three years, should certain financial targets be achieved and other conditions met.

Located in Boardman, Ohio, and employing approximately 200 people, Summer Garden develops, manufactures and markets a wide range of premium sauces and condiments, including tomato and cream-based pasta sauces, BBQ sauces, dipping sauces and dressings. Its portfolio consists of approximately 250 products sold through more than 20,000 locations under the Gia Russa and Little Italy in the Bronx brands and under the G Hughes brand, a leader in the U.S. sugar-free BBQ sauce segment. Summer Garden also acts as a co-packer for well-known brands.

“The acquisition of Summer Garden supports our ambition to become a more diversified North American food and beverage company,” said Nathalie Lassonde, CEO and Vice-Chair of the Board of Directors of Lassonde Industries Inc. “Growing our specialty food activities is one of Lassonde’s key strategic objectives and we are happy to have found the right company to help us achieve this objective. Our culture and values align with those of Summer Garden, which is also a multi-generational family business, with an entrepreneurial spirit and strong commitment to its employees, customers, consumers and the communities in which it operates. We are looking forward to closing the transaction and welcoming new talented employees to the Lassonde organization.”

Transaction Details

  • For the 12-month period ending in May 2024, Summer Garden generated sales of US$148.0 million and adjusted EBITDA[1] of approximately US$27.9 million;
  • The purchase price is US$235.0 million payable in cash at closing, on a cash-free debt-free basis and is subject to customary balance sheet adjustments and other related adjustments;
  • An amount of up to US$45.0 million may be payable in various instalments over the next three years, should certain financial targets be achieved and other conditions met;
  • The transaction structure will allow the Corporation to generate a benefit amounting to approximately US$30.0 million, on a net present value basis, related to the tax deductibility of this investment;
  • The transaction is expected to be accretive to margins and earnings before synergy considerations. The acquisition’s internal rate of return is expected to be higher than the Corporation’s weighted average cost of capital;
  • The transaction is not subject to a financing condition and will be financed through the Corporation’s available credit facilities;
  • Pro forma net debt to adjusted EBITDA1 ratio at closing is expected to be under 2.20:1, leaving sufficient headroom to continue the deployment of the Corporation’s strategy;
  • The transaction is subject to regulatory clearance and other closing conditions specified in the acquisition agreement and is expected to close within 30 to 45 days.

“We are excited with the expansion of our specialty food activities by adding a product portfolio, and capabilities that delivers an immediate path to growth at attractive and accretive margins,” added Vince Timpano, president and chief operating officer, Lassonde Industries Inc. “It marks another important step in the execution of our long-term strategy and moves us closer to achieving our objective of $3 billion in sales with further margin improvement. Through brands that hold growth potential in their categories, Summer Garden expands our core offering in pasta sauces and extends our reach into new adjacencies. We are also integrating high-quality assets into our network, including additional retort capabilities, to position ourselves as the manufacturer of choice for our customers. Finally, with cash flow generation to support future expansion, we view this transaction as the creation of a new growth platform for Lassonde.”

“This partnership ensures our legacy will continue to thrive,” said Thomas Zidian, president and CEO of Summer Garden. “We are confident it will benefit our customers through enhanced products and will offer our employees new opportunities for development and advancement. We also believe the values which have guided the Zidian family business from the start will continue to be the guiding principles under the stewardship of Lassonde Industries, Inc.”

Canaccord Genuity / CG Sawaya Partners served as exclusive financial advisor to Lassonde and Brown Gibbons Lang & Company served as exclusive financial advisor to The Zidian Group.

 


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