Compass Diversified Holdings Announces Sale of Manitoba Harvest to Tilray
February 20 2019 - 7:00AM
Transaction Expected to Result in Sizable
Gain on Sale
Compass Diversified Holdings (NYSE: CODI) (“CODI” or the
“Company”), an owner of leading middle market businesses, announced
today that it has entered into a definitive agreement (the
“Agreement”) to sell its majority owned subsidiary, FHF Holdings
Ltd. (“Manitoba Harvest”), to Tilray Inc. (“Tilray”) (NASDAQ:
TLRY), a global leader in cannabis research, cultivation,
production, and distribution. Under the terms of the Agreement,
Manitoba Harvest will be sold to Tilray for an aggregate sales
price of up to C$419 million.
The Company expects to realize a sizable gain on
the sale and intends to use the net proceeds to repay outstanding
debt under the Company's revolving credit facility.
Commenting on the transaction, Elias Sabo, CEO
of Compass Diversified Holdings, stated, “We acquired a majority
interest in Manitoba Harvest over three years ago and are proud to
have partnered with the company to raise awareness of Hemp as a
super food, growing the customer base across North America, more
than doubling household penetration in the U.S., and driving
category expansion. I want to thank Bill Chiasson and the company's
exceptional management team and wish them continued success. I am
thrilled that they will be partnering with a recognized global
category leader in Tilray, where they will have an unparalleled
opportunity in a rapidly expanding market.”
Bill Chiasson, CEO of Manitoba Harvest, added,
“With CODI’s support, guidance, and patient investment style,
Manitoba Harvest has solidified its position as the world’s largest
vertically integrated hemp food brand. CODI’s ability and
willingness to make substantial investments into consumer marketing
for our leading brands has resulted in a greatly expanded consumer
appreciation of hemp-based food products, accelerating sales
growth, and a ubiquitous market presence in highly desirable retail
locations. I would like to thank CODI for all that they have done
to bring Manitoba Harvest to the transformative market opportunity
that we are realizing today.”
Mr. Sabo concluded, “Manitoba Harvest highlights
CODI’s proven model of identifying and acquiring niche leading
businesses, utilizing our significant liquidity and
permanent capital to execute value-added initiatives to
strengthen our subsidiaries, and opportunistically divesting our
businesses to enhance value creation for our shareholders. With
this transaction, we will significantly increase our total realized
gains and we intend to deploy the net proceeds towards repaying our
revolving credit facility.”
Under the terms of the Agreement, shareholders
of Manitoba Harvest, including CODI, will receive up to C$419
million, of which C$277.5 million is payable at closing, comprised
of C$150 million in cash and C$127.5 million in Tilray Shares. Six
months after closing, Manitoba Harvest shareholders, including
CODI, will receive C$92.5 million, comprised of C$50 million in
cash and C$42.5 million in Tilray Shares. Manitoba Harvest
shareholders, including CODI, will receive an additional C$49
million in Tilray Shares upon Manitoba Harvest achieving certain
performance milestones in 2019, such amount to be reduced to the
extent that some or all of the milestones are not achieved.
The transaction will be subject to normal post-closing
adjustments.
The closing of this transaction is subject to
customary terms and conditions and court approval. The transaction
will be completed by plan of arrangement under the Business
Corporations Act of British Columbia. The transaction is expected
to close within the next 30 days.
Stikeman Elliott LLP acted as legal counsel to
sellers. Jefferies LLC acted as financial advisor to CODI in
connection with the transaction.
About Compass Diversified Holdings
(“CODI”)CODI owns and manages a diverse family of
established North American middle market businesses. Each of its
current subsidiaries is a leader in its niche market.
CODI maintains controlling ownership interests
in each of its subsidiaries in order to maximize its ability to
impact long term cash flow generation and value. The Company
provides both debt and equity capital for its subsidiaries,
contributing to their financial and operating flexibility. CODI
utilizes the cash flows generated by its subsidiaries to invest in
the long-term growth of the Company and to make cash distributions
to its shareholders.
Our ten majority-owned subsidiaries are engaged
in the following lines of business:
- The design and marketing of
purpose-built tactical apparel and gear serving a wide range of
global customers (5.11);
- The manufacture of quick-turn,
small-run and production rigid printed circuit boards
(Advanced Circuits);
- The manufacture of engineered
magnetic solutions for a wide range of specialty applications and
end-markets (Arnold Magnetic Technologies);
- Environmental services for a
variety of contaminated materials including soils, dredged
material, hazardous waste and drill cuttings (Clean
Earth);
- The design and marketing of
wearable baby carriers, strollers and related products
(Ergobaby);
- The design and manufacture of
custom molded protective foam solutions and OE components
(Foam Fabricators);
- The design and manufacture of
premium home and gun safes (Liberty Safe);
- The manufacture and marketing of
branded, hemp-based food products (Manitoba
Harvest);
- The manufacture and marketing of
portable food warming fuels and creative ambience solutions for the
hospitality and consumer markets (Sterno
Products); and
- The design, manufacture and
marketing of airguns, archery products, optics and related
accessories (Velocity Outdoor).
About TilrayTilray is a
global pioneer in the research, cultivation, production and
distribution of cannabis and cannabinoids currently serving tens of
thousands of patients and consumers in twelve countries spanning
five continents.
About Manitoba Harvest
Headquartered in Winnipeg, Manitoba, and founded in 1998, Manitoba
Harvest is a pioneer and global leader in branded, hemp-based
foods. The company is the world’s largest vertically-integrated
hemp food manufacturer and is strategically located near its supply
base in Canada. Manitoba Harvest’s 100% all-natural product lineup
includes hemp hearts, hemp protein powder and hemp snacks and are
currently carried in about 16,000 retail locations across the U.S.
and Canada.
This press release may contain certain
forward-looking statements, including statements with regard to the
future performance of CODI. Words such as "believes," "expects,"
"projects," and "future" or similar expressions, are intended to
identify forward-looking statements. These forward-looking
statements are subject to the inherent uncertainties in predicting
future results and conditions. Certain factors could cause actual
results to differ materially from those projected in these
forward-looking statements, and some of these factors are
enumerated in the risk factor discussion in the Form 10-K filed by
CODI with the SEC for the year ended December 31, 2017 and other
filings with the SEC. Except as required by law, CODI undertakes no
obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise.
|
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Compass Diversified
HoldingsRyan J. FaulkinghamChief Financial
Officer203.221.1703ryan@compassequity.com |
Investor
Relations and Media Contact:The IGB Group Leon Berman 212.477.8438
lberman@igbir.com |
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