Rockville, Maryland-based confectioner Sherwood Brands has acquired Asher Candy Acquisition Corp, located in New Hyde Park, New York.
The deal is worth about 270,000 Sherwood common shares, subject to escrows for indemnification and adjustment for final audit, and warrants exercisable for Sherwood common shares having a value of US$250,000.
Founded in 1947, Asher, which manufactures candy canes and other hard candies under the Asher brand name, had revenue for 2001 of approximately US$11.5m.
Uziel Frydman, president and COO of Sherwood, said: “This acquisition expands our line of branded candy products, and fits very well into our plans to lever our production and marketing capability by substantially expanding our sales volume. We see excellent opportunities to increase Asher’s sales volume and reduce overhead costs.
“The transaction brings Sherwood a variety of established products as well as several interesting new items with substantial sales potential that are fully developed but not yet on the market. It also opens the door for us to build new relationships with existing Asher accounts that are not already customers of Sherwood. We are optimistic that the Asher acquisition will be accretive to Sherwood’s earnings in fiscal 2003 that begins in August.”
Frydman noted that the acquisition of Asher complements the recently completed purchase of certain assets of KR Candy Corp., Brooklyn, New York. KR manufactured jelly beans and lollipops under the Kastins brand name. He said that Sherwood has completed the move of the KR assets to the company’s new manufacturing facility in Chase City, Virginia. In addition, he said that Sherwood will stop all manufacturing at its Rhode Island facility this week and move the equipment to the Chase City plant, which is expected to be fully operational in June.
Frydman said that the company plans to achieve cost savings of about US$1m annually from this manufacturing consolidation.
“Together, the Asher and KR transactions are expected to add about US$15m to Sherwood’s revenue base beginning in 2003. These transactions are the latest but by no means the last steps in our strategy to combine internal growth with acquisitions to build Sherwood into a far larger and more profitable company,” Frydman said.
