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2 years ago
CONGRATS! Farmer Brothers announces agreement to sell direct ship business and Northlake, Texas facility to TreeHouse Foods
Approximately $100 million sale expected to advance the company’s transformation plan and commitment to direct store delivery sector
NORTHLAKE, Texas, June 07, 2023 (GLOBE NEWSWIRE) -- Farmer Brothers Company (NASDAQ: FARM), a leading roaster, wholesaler, equipment servicer and distributor of coffee, tea and other allied products, announced today it has entered into a definitive agreement to sell its direct ship business, including its Northlake, Texas facility to TreeHouse Foods, Inc. for approximately $100 million, subject to customary purchase price adjustments.
The company expects to use the proceeds from the sale to pay down outstanding debt associated with its asset-based lending (ABL) and retire its term loan. The sale will increase Farmer Brothers’ balance sheet flexibility and allow it to focus on execution, improving margins and driving strategic growth in the direct store delivery (DSD) and key account sales channels.
“Exiting the direct ship space will allow us to focus almost exclusively on DSD, which is our most profitable and highest growth potential business, while also assuring our valued direct ship customers are well-served by a national leader,” said Farmer Brothers President and Chief Executive Officer Deverl Maserang. “With a sole focus on DSD, we will be able to realize even greater internal efficiencies and cost savings, while also better serving our largest, most profitable customer base.”
The sale is subject to customary closing conditions and is currently expected to close within the next 60 days. It will include the transition of approximately 180 Farmer Brothers team members to TreeHouse Foods as TreeHouse Foods moves to begin operations at the Northlake, Texas facility.
At closing, Farmer Brothers will transition the entirety of its DSD production operations to its Portland, Oregon roasting and production facility and will continue existing relationships with third-party roasters for additional capacity. The company’s corporate headquarters will remain in Northlake, Texas, where it will continue to lease office space at its current location. Farmer Brothers’ DSD business sells coffee, tea, spices and breakfast/brunch products through a wholly owned national network of 80 independent branches, five distribution centers and nearly 240 routes, reaching 45,000 delivery points annually. Following the sale of its Northlake, Texas facilities, Farmer Brothers expects its annual revenue will be approximately $350 million with vastly improved product margins.
“Our shift to a DSD-focused organization will allow us to further increase internal efficiency, decrease our operational cost and allow us to enjoy higher margins,” said Farmer Brothers Chief Financial Officer Scott Drake. “In addition, proceeds from the sale will allow us to solidify our financial position by recapitalizing the company, which gives us flexibility to explore additional growth opportunities.”
Winston & Strawn LLP is acting as Farmer Brothers’ legal advisor for the transaction.
About Farmer Brothers
Founded in 1912, Farmer Brothers is a national coffee roaster, wholesaler, equipment servicer and distributor of coffee, tea and culinary products. The company’s product lines, include organic, Direct Trade and sustainably produced coffee. With a robust line of coffee, hot and iced teas, cappuccino mixes, spices and baking/biscuit mixes, Farmer Brothers delivers extensive beverage planning services and culinary products to its U.S.-based customers. It serves a wide variety of customers, from small independent restaurants and foodservice operators to large institutional buyers, such as restaurant, department and convenience store chains, hotels, casinos, healthcare facilities and gourmet coffee houses, as well as grocery chains with private brand coffee and consumer branded coffee and tea products, and foodservice distributors.
Headquartered in Northlake, Texas, Farmer Brothers generated net sales of $469.2 million in fiscal 2022. The company’s primary brands include Farmer Brothers, Artisan Collection by Farmer Brother, Superior, Metropolitan, China Mist and Boyd’s.
About TreeHouse Foods
TreeHouse Foods, Inc. is a leading private label food and beverage manufacturer in North America. Our purpose is to engage and delight – one customer at a time. Through our customer focus and category experience, we strive to deliver excellent service and build capabilities and insights to drive mutually profitable growth for TreeHouse and our customers. Our purpose is supported by investment in depth, capabilities and operational efficiencies, which are aimed to capitalize on the long-term growth prosp
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