Canada's Lassonde Industries Acquires Clement Pappas

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June 21, 2011

Lassonde Industries, one of Canada's leading fruit juice and beverage manufacturer, has entered into a definitive agreement to acquire Clement Pappas and Co. Inc. -- a leading U.S. producer of store brands fruit juices and drinks --  for $390 million in cash.

The merger will create a major North American manufacturer in the fruit juice and drink category with coast-to-coast presence in Canada and the U.S.

"This transaction combines two premier fruit juice and drink manufacturers to form a North American category leader," said Pierre-Paul Lassonde, chairman and CEO of Lassonde Industries Inc. "It is aligned with our strategy of consistent, measured growth and enhances our overall position in the industry."

The deal, which is expected to close in August, will yield Lassonde Industries 71 percent of Clement Pappas, Lassonde said in a statement. Of the remaining 29 percent ownership stake, 19 percent will be held by the Pappas family and 10 percent by the Lassonde family.

Lassonde Industries will invest approximately $106 million for the transaction with the balance of $44 million to be provided by members of the Pappas and Lassonde families.

"This acquisition provides a platform for continued growth in the U.S. market through Clement Pappas' extensive coast-to-coast network," said Jean Gattuso, COO of Lassonde Industries Inc. "The two companies are very complementary and together will have a well diversified product offering."

Founded in 1942, Clement Pappas is the second-largest producer of store brand ready-to-drink fruit juices and drinks in the U.S. and a major producer of cranberry juices, drinks and sauces. The family-owned corporation, headquartered in Carneys Point, N.J., operates five production facilities located in Seabrook, N.J.; Baltimore; Mountain Home, N.C.; Springdale, Ark. and Ontario, Calif. It also runs a cranberry receiving station in Carver, Mass.

Clement Pappas employs approximately 630 people and posted sales of $390 million and adjusted EBITDA of $60 million in the fiscal year ended Sept. 30, 2010.

Clement Pappas will become a subsidiary of Lassonde Industries and maintain its headquarters in Carneys Point, New Jersey. It will continue to do business under the Clement Pappas name and will retain its existing management team.

"We are happy that we are joining an organization that is successful, shares our values and will continue the Clement Pappas legacy," said Dean C. Pappas, CEO of Clement Pappas. "This transaction will help us better service our customers and remain true to our principles of quality, integrity, accomplishment and innovation. Equally important, we are confident that we will continue to operate with the highest standards in quality, food safety and environmental sustainability."

Transaction Benefits
According to Lassonde, the acquisition of Clement Pappas will:

• Provide increased critical mass to support national customers throughout North America and benefit from combined logistics, distribution, purchasing and other economies of scale;
• Position Lassonde Industries as a major player in the fruit juice and drink category with a diversified product portfolio, an expanded customer base in both the store brand and national brand products, and a presence throughout the U.S. and Canada;
• Provide growth opportunities and add extensive expertise in cranberry juice, drinks and sauces. The combined organization will offer product lines using a wide variety of processes and packaging for fruit juices and drinks.

Lassonde Industries and Clement Pappas also share common values, “including a strong commitment to innovation, quality and integrity.” With a combined 162 years in business the companies also share a similar history. Both companies came from humble beginnings in the vegetable canning business and then branched out to become significant players in the fruit juices and drinks markets.

Lassonde Industries develops, manufactures and markets an line of fruit and vegetable juices and drinks as well as specialty food products such as fondue broth and sauces, soups, gravies, canned corn-on-the-cob, bruschetta toppings, tapenades, pestos and sauces for pasta and pizza. Lassonde Industries, which employs 1,300, also imports wines and olive oil.

SBD Views: Good to see a merger where the whole is clearly greater than the sum of the parts. This is a smart move that should fuel growth for the newly merged company on both sides of the border. -- John Failla for Store Brands Decisions.

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