SunOpta Inc., a US-based global pioneer of sustainable, plant-based foods and beverages, last week announced the sale of certain frozen fruit assets to Nature’s Touch, a company based in Quebec, Canada. The transaction is valued at $141 million and represents the company’s exit from the frozen fruit business. Included in the sale are the primary assets of the frozen fruit business, including facilities located in Edwardsville, KS and Jacona, Mexico, along with a significant quantity of frozen fruit inventory. The transaction closed on Oct. 12, 2023.
“The divestiture of our frozen fruit business is a major milestone in our portfolio optimization efforts and our multi-year transformation to becoming a leading manufacturer of value-add products in plant-based and healthy snack categories,” said Joe Ennen, Chief Executive Officer of SunOpta. “This transaction is significantly accretive to margins, results in a more capital efficient business model, strengthens our balance sheet and ensures we are singularly focused on the most attractive growth opportunities.”
“We are also pleased with our third quarter revenue growth from our continuing plant-based and healthy snacks operations and the strong demand we experienced across key products and categories throughout the period,” Ennen continued. “Importantly, volume was the primary factor driving our third quarter growth reflecting market share gains and total addressable market expansion efforts. Our latest results continue to reflect the competitive advantages that underpin our value-add business model including a scalable, geographically diverse platform with proven expertise in complex manufacturing coupled with leading innovation capabilities.”
The transaction is valued at $141 million, inclusive of $20 million of seller promissory notes due in three years. The transaction includes a significant portion of the assets associated with the frozen fruit business that had previously been reported in the Fruit-Based Foods and Beverages operating and reportable segment. The standalone frozen fruit business generated approximately $263 million of revenue and approximately $15 million of adjusted EBITDA over the twelve-month period ending July 1, 2023. The net cash proceeds will be used to pay down debt and other liabilities, which will reduce our net leverage from 3.7x at the end of the second quarter of 2023 to 3.4x on a pro forma basis at closing and to 3.2x factoring in the collection of the seller notes. Additional details regarding the expected pro forma financial impact from the divestiture will be provided in SunOpta’s Third Quarter 2023 Financial Results Release in early November 2023.
Meanwhile on the heels of the resignation of SunOpta CFO and General Manager of Fruit-Based Foods and Beverages Scott Huckins last week as he pursues another opportunity, the company appointed Greg Gaba as Chief Financial Officer of the company effective Oct. 13, 2023. Gaba has been with the company for more than six years and most recently served as Deputy CFO. “I am thrilled to have Greg join the senior leadership team and lead our finance organization,” said Ennen. “Greg has consistently provided critical financial insights and played a pivotal role in achieving our business goals. His extensive knowledge of our business operations, coupled with a deep understanding of cost control measures will undoubtedly reinforce our financial leadership and support our continued growth and profitability.”
Prior to joining the company, Gaba worked in finance and external auditor roles at SMTC Corporation and Ernst & Young. Gaba will lead all aspects of the company’s finance function including financial planning & analysis, accounting, SEC reporting, tax and treasury.
“I want to thank Scott for his efforts at SunOpta these past four years. Scott’s leadership has been critical in developing people and transforming the portfolio of the company to focus on higher growth, higher return opportunities that are differentiated and leverage the company’s competitive strengths,” said Ennen.