UNFI, the Providence, RI-based national distributor of natural and organic foods, specialty foods, and related products in the United States and Canada, announced that it has entered into a definitive agreement to acquire all outstanding stock of Haddon House Food Products, Inc. and certain affiliated entities as well as certain real estate, in a cash transaction for approximately $217.5 million, subject to certain customary post-closing adjustments.
Founded in 1960 by the Anderson family, the Medford, NJ-based Haddon House is a distributor and merchandiser of natural and organic and gourmet ethnic products throughout the Eastern United States which has two distribution centers in Howell, NJ and Richburg, SC. The company currently employs approximately 1,300 associates and has a diverse, multi-channel customer base including conventional supermarkets, gourmet food stores and independently owned product retailers.
“Haddon House has a unique product and service offering that we expect to play an important role in our ongoing strategy to build out UNFI’s gourmet and ethnic product categories across the country,” stated Steven Spinner, UNFI’s president and CEO. “The Haddon House team has demonstrated exemplary customer service and growth over the last decade while also building a distinctive private label brands business. We are excited to have them join the UNFI family as we venture into new channels and markets together. I look forward to working with David Anderson Sr. and David Anderson Jr., both of whom will remain at the company in leadership roles, as we move this exciting service offering and product category across our companies and throughout the U.S.”
“This transaction will provide us with greater operating scale and resources to further develop our product and service offering as we work with the UNFI team to broaden our geographic reach and route to market across complementary and new customer bases. We are excited about the opportunities this combination will create for consumers, employees, suppliers, and our stockholders,” stated David Anderson Sr., president of Haddon House.
Consummation of the transaction is subject to the satisfaction of customary closing conditions, including compliance with the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and is expected to close at the start of the fourth quarter of fiscal 2016. Upon closing, Haddon House will be operated as a wholly-owned subsidiary of UNFI. The transaction is expected to be moderately accretive to UNFI’s earnings in fiscal 2017. UNFI expects to finance the purchase price with a combination of available cash and borrowings under its revolving credit facility.
In a related announcement, UNFI posted preliminary unaudited second quarter 2016 sales and earnings for the period ended January 30 2016. The large distributor revised its earnings forecast for the remainder of its fiscal year citing rapid changes in the grocery industry. UNFI expects adjusted earnings estimates to drop approximately 16 percent below previous predictions. New earnings expectations are now forecasted in the range of $2.34 -2.44 for its full fiscal year. That compares to an earlier earnings forecast in the $2.79-2.89 range.
Spinner commented, “Our updated results reflect the rapidly changing near term industry dynamics facing UNFI and its constituents. We have made significant progress in developing our fresh platform, e-commerce, brands and infrastructure. UNFI’s second quarter preliminary results and our view of fiscal 2016 reflect our commitment to investing in growth throughout our organization while we continue to evaluate our cost structure and customer experience.
UNFI expects to release its full results for its fiscal second quarter and six months ended January 30, 2016 on March 7, 2016.