SunOpta Announces Transformational and Accretive Strategic Acquisition of Sunrise Growers

03 Aug 2015 --- SunOpta Inc., a leading global company focused on organic, non-genetically modified and specialty foods, announced it signed a definitive agreement to acquire Sunrise Holdings (Delaware), Inc. from an investor group led by affiliates of Paine & Partners LLC.

Sunrise Growers is the leading 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 is transformative for our company as it significantly expands our scale in the private label frozen fruit category and aligns well with consumer demands for healthy, convenient and minimally processed foods. Sunrise Growers is a high growth business that is expected to enhance product mix and thus our margin profile and accelerate our strategic focus on integrated consumer products," said SunOpta's President and Chief Operating Officer, Rik Jacobs. "It also provides us with an immediate leadership position in frozen fruit that broadens and deepens our existing customer relationships and complements our leadership in the aseptic non-dairy category. Ed Haft, President and Chief Executive Officer of Sunrise Growers, will lead our frozen fruit operations after the transaction closes. We welcome Ed and his team to SunOpta and look forward to leveraging their deep category, customer and processing knowledge across our existing vertically integrated platform."   

"Our team of passionate and committed employees has built a leading private label frozen fruit supplier with a highly scaled operation and top market position," said Haft. "We are excited to have our business be part of the global team at SunOpta and believe this will position us to serve more customers and expand our market reach.  Frozen IQF fruits are harvested at their peak of freshness and nutrition and provide a great tasting, convenient and sustainable solution for consumers who want healthy foods."

"We have a strong balance sheet that provides the financial flexibility to complete this strategic, accretive acquisition," said Steve Bromley, SunOpta's Chief Executive Officer. "Sunrise Growers has significant share in a strong and growing category which is aligned with our core focus on healthy foods, and we expect to realize meaningful operational efficiencies and commercial synergies.  We believe this transaction is transformative for SunOpta, should lead to significant value for our shareholders and offers immediate benefits for our customers."

Transaction Details

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. The transaction is valued at approximately $450 million. 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.

This press release does not constitute an offer or sale of any securities. Any securities offered may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.