VANCOUVER — Food producer Premium Brands Holdings Corp. says it has reached an agreement to acquire Seattle-based SK Food Group, Inc. for $42.5 million.
The Vancouver-based company said Monday the acquisition of SK Food Group, a manufacturer of artisan breakfast sandwiches and wraps, fits "perfectly" with its core strategies.
"The combination of SK Food Group and our existing sandwich businesses will create an industry-leading platform with state-of-the-art production facilities, innovative products, leading brands and a North American-wide reach," stated George Paleologou, president and CEO of Premium Brands.
"We see significant opportunities to generate synergies by leveraging the strengths of Premium Brands' other businesses, including their extensive distribution networks in Western Canada," added Steve Sposari, president and CEO of SK Food Group.
SK Food Group sells to customers across Canada and the U.S. and has annual sales of about $90 million.
The $42.5-million purchase price consists of $18.4 million in cash, approximately 500,000 shares valued at $6.8 million, notes worth $6.5 million which are contingent upon SK Food Group achieving certain profitability targets this year, and another $10.8 million in notes payable over the next three years.
The cash portion of the purchase price will be funded through Premium Brands' senior credit facilities.
Premium Brands owns specialty food manufacturing and distribution businesses with operations in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Washington State and Nevada. Its brands include Grimm's, Harvest, McSweeney's, Bread Garden Express, Hygaard and others.
Shares in the company fell eight cents to $13.95 in Monday trading on the Toronto Stock Exchange.