Smart Balance acquires gluten-free food firm Udi’s Healthy Foods

Smart Balance has completed the acquisition of Udi’s Healthy Foods, a producer of gluten-free foods, from private equity firm Hubson Acquisition, in an all-cash deal of $125m.

According to Smart Balance, the acquisition will strengthen its gluten-free food division Glutino. Udi’s has a leading position in bread and baked goods categories, while Glutino has a leading market share in the snacks and grocery segment.

Smart Balance chairman and CEO Stephen Hughes said the deal establishes the company as a leader in gluten-free products, accelerates its growth rate, and further diversifies its health and wellness brands.

"As a result, we expect the company’s organic revenue growth rate to accelerate, and we look forward to providing our initial outlook on Udi’s in connection with our second quarter call on August 2, 2012," Hughes added.

The acquisition was financed through the proceeds of a new $280m senior secured credit facility.

Smart Balance, which produces functional food products, said that this deal will be treated as an asset purchase, and hence expects to realise future tax benefits of approximately $22m, resulting in an effective purchase amount of $103m.

The company expects the transaction to be accretive to earnings per share (EPS) in fiscal year 2013.

Udi’s Healthy Foods, headquartered in Denver, Colorado, produces gluten-free bread, baked goods, frozen pizza, and granola, among others, under Udi’s Gluten Free Foods brand.

The company distributes its products to retail outlets and food service channels, and its sales doubled to $60.9m in the 12-month period ended 31 March 2012.