US-based Compass Diversified Holdings has entered into a deal to buy Canada's Fresh Hemp Foods, which manufactures Manitoba Harvest hemp-based foods.
Compass described Manitoba Harvest as a "pioneer" in branded hemp-based foods. According to the investment vehicle, the company's products are among the "fastest growing" in the hemp foods market and natural food industry.
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Manitoba Harvest is stocked at around 7,000 retailers in Canada and the US. For the last twelve months ending 31 May, Manitoba Harvest generated net revenues of around C$44.9m (US$36.1m) and adjusted EBITDA of approximately C$6.4m. The results represented year-over-year growth of 28.5% and 59.4% respectively, Compass said.
Under the deal, Compass will take an initial stake of 87%. Manitoba Harvest CEO Mike Fata, other senior management and existing shareholder Clif White Road Investments will retain stakes in the business. Fata will continue as CEO.
The purchase price for Manitoba Harvest is based on a total enterprise value of C$132.5m and will also include working capital and certain other adjustments upon closing, Compass said. Further financial details were not provided.
Compass CEO Alan Offenberg said: "Consistent with our previous platform acquisitions of leading branded consumer businesses, Manitoba Harvest possesses several qualities critical for success. Specifically, the company is a leader that operates in a large and expanding marketplace, has strong and growing cash flows, a passionate consumer following, an experienced management team and compelling expansion opportunities.
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By GlobalData"Under the leadership of Mike Fata, the company's innovative founder and a thought leader in the hemp-based foods industry, Manitoba Harvest has developed a strong and defensible market position with a loyal customer base and a substantial presence at major retail and online stores."
Fata said the deal would support Manitoba Harvest's future growth. "We are confident that we can further grow market share and continue to offer new innovative hemp-based food products to our customers. As our market continues to rapidly develop and consumers embrace the nutritional benefits of our products, with the added support of [Compass], we will be in a strong position to accelerate our long-term growth potential."
The acquisition is expected to close in the next 45 days and remains subject to closing conditions.
