Canadian food group Premium Brands Holdings has announced the acquisition of Ontario-based Belmont Meat Products for CAD50m (US$37.7m).
Belmont generates annual sales of approximately CAD120m. It manufactures premium burger patties for foodservice and retail customers throughout Canada and is currently expanding into the US retail market. “Assuming Belmont has an EBITDA margin of 8%, slightly lower than Premium’s retail margin, we estimate that the company generates roughly CAD10m in annual EBITDA, implying a five times transaction multiple,” Canaccord Genuity analyst Derek Dley noted.
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Premium Brands president and CEO George Paleologou said that he expects the deal will generate “significant synergies”.
“We are not only very excited about Belmont’s business and the potential for it to grow under the Premium Brands umbrella, but also the role it will play in creating value in several of our other businesses. In particular, we expect to generate significant synergies between Belmont’s business, our burger operations in western Canada and our Centennial Foodservice business’ recently announced initiative to expand into the Ontario market.”
The transaction is expected to be immediately accretive to earnings per share and free cash.
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