SunOpta exits frozen fruit business, sells to Nature’s Touch for $141m

SunOpta Inc., a renowned leader in the sustainable, plant-based foods sector from the U.S., has officially parted ways with its frozen fruit business. This strategic divestiture, worth a staggering $141 million, has handed over its primary frozen fruit assets to Nature’s Touch, a dominant force in the industry based out of Quebec, Canada. As part of this lucrative transaction, the deal encompasses facilities in Edwardsville, Kansas and Jacona, Mexico, as well as a notable portion of frozen fruit inventory. All transactional activities concluded smoothly on October 12, 2023.

SunOpta’s Renewed Vision

The CEO of SunOpta, Joe Ennen, expressed that this sale is not merely a business decision but a major leap in the company’s transformation journey. SunOpta aims to establish itself as a forerunner in producing value-added items within the plant-based and health-centric snack sectors. Joe Ennen emphasized, “Our strategic shift will enhance our profit margins, usher in a more capital-light business model, fortify our financial stance, and streamline our attention towards highly promising growth avenues.”

Moreover, Ennen shed light on SunOpta’s impressive Q3 revenue uptick, attributing it to the robust demand across pivotal products and categories. SunOpta’s focus on volume expansion has been a pivotal driver, showcasing the company’s growing market share and aggressive market outreach strategies.

Digging Deep into the Deal

This collaboration with Nature’s Touch has a valuation of $141 million, which includes $20 million in seller promissory notes set for a three-year maturity. The transaction captures a majority of assets linked to the frozen fruit venture, previously encompassed within the Fruit-Based Foods and Beverages segment. Remarkably, this standalone frozen fruit arm raked in approximately $263 million in revenue and a commendable $15 million in adjusted EBITDA over the year culminating on July 1, 2023. With this influx, SunOpta is geared to diminish debts, consequently bringing down the net leverage from 3.7x as of Q2 2023 to a more favorable 3.2x upon the collection of seller notes. The anticipated pro forma financial repercussion post-divestiture will be further detailed in SunOpta’s upcoming Q3 2023 Financial Results set to be unveiled in early November 2023.

Advisory Partners

For this significant transaction, SunOpta entrusted Evercore for financial guidance, with Sidley Austin LLP and Wilson Abogados, SC rendering legal counsel. On the flip side, Nature’s Touch garnered financial advisement from Ernst & Young Orenda Corporate Finance Inc. in Canada, legal insights from Lowndes, Drosdick, Doster, Kantor & Reed, P.A. (U.S.), Cuesta Campos y Asociados, S.C. (Mexico), and Miller Thomson LLP (Canada).

With this strategic shift, SunOpta is geared to chart new territories in the sustainable, plant-based realm, promising exciting times ahead!