US stock exchange listed company Compass Diversified Holdings (CODI) has made an agreement to acquire a stake of around 87% of one of Canada’s major hemp food suppliers, Fresh Hemp Foods Ltd (Manitoba Harvest), for C$132.5 million (US$108 million).
The acquisition is expected to close in mid-July, subject to customary closing conditions.
Headquartered in Winnipeg, Canada, Manitoba Harvest is a pioneer and global leader in branded, hemp-based foods. The company’s products are the fastest growing in the hemp food market and among the fastest growing in the natural foods industry.
Manitoba Harvest’s award-winning products are currently carried in about 7,000 retail stores across the US and Canada.
Manitoba Harvest generated net revenues of approximately C$44.9 million and adjusted earnings (EBITDA) of approximately C$6.4 million for the last twelve months ending May 31, 2015, representing year-over-year growth of 28.5% and 59.4%, respectively. The company generated adjusted EBITDA earnings for the six months ended May 31, 2015 of approximately C$5.0 million.
CODI’s initial equity ownership in Manitoba Harvest as a result of the transaction will be approximately 87% on a primary basis.
Mike Fata, CEO of Manitoba Harvest; Clif White Road Investments LLC, an existing shareholder; and certain other management team members will re-invest alongside CODI.
“We are pleased to capitalize on our balance sheet strength and add Manitoba Harvest to our family of niche leading businesses,” said Alan Offenberg, CEO of Compass Diversified Holdings.
“Consistent with our previous platform acquisitions of leading branded consumer businesses, Manitoba Harvest possesses several qualities critical for success. Specifically, the company is a leader that operates in a large and expanding marketplace, has strong and growing cash flows, a passionate consumer following, an experienced management team and compelling expansion opportunities.”
“Under the leadership of Mike Fata as CEO, the company’s innovative founder and a thought leader in the hemp-based foods industry, Manitoba Harvest has developed a strong and defensible market position with a loyal customer base and a substantial presence at major retail and online stores.”
Mr. Fata commented: “The acquisition of Manitoba Harvest by CODI is an exciting moment in our company’s history. With CODI’s proven history of supporting and growing niche market leaders, we are confident that we can further grow market share and continue to offer new innovative hemp-based food products to our customers.”