Premium Brands to acquire Freybe Gourmet Foods

Canada-based marketer and distributor of branded speciality food products Premium Brands has entered into a definitive agreement to acquire Freybe Gourmet Foods for C$55m ($53.8m).

Freybe Gourmet Foods, founded in 1844, is one of the leading manufacturers of premium gourmet deli meats in western Canada, with annual revenues of about $78m.

The company operates a 118,000ft² production facility in Langley, British Columbia, which is currently owned and operated by the Freybe family.

Premium Brands president and chief executive officer George Paleologou said that the acquisition will provide Premium Brands with another leading speciality food company that further enhances the strength of its deli meats business platform.

"We will also be adding the Freybe name, which is one of western Canada’s oldest and most iconic local brands, to our diverse portfolio of leading speciality food brands," Paleologou said.

"Looking forward, we see significant opportunities to help Freybe grow its business and brand by leveraging both our deli meat platform’s sales and marketing infrastructure as well as our proprietary distribution networks in the foodservice and retail channels," Paleologou added.

Premium Brands plans to fund the transaction through its senior credit facilities.

The transaction, which is subject to customary closing conditions, is expected to close shortly.

The acquisition is expected to be immediately accretive to Premium Brands’ earnings per share and free cash flow per share.

Premium Brands said that the Freybe production facility has significant unutilised capacity and is suitable for replacing the capacity of Premium Brands’ deli meats production facility in Richmond, which is scheduled to be closed later this year.

The company plans to transfer a significant portion of production at the Richmond plant to Freybe’s Langley facility, a move which is expected to result in cost and freight synergies.

In addition, Premium Brands plans to use Freybe’s unutilised production capacity to support its growth in the US through its Washington-based business Hempler Foods.

Over the last three years, Hempler has been growing at an average compounded rate of almost 17%, according to the company.

Premium Brands owns a wide range of speciality food manufacturing and food distribution businesses with operations in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, Nevada and Washington State.