Lassonde agrees to acquire Summer Garden Food Manufacturing

Acquisition agreement

Lassonde Industries has agreed to acquire The Zidian Group, operator of Summer Garden Food Manufacturing in Boardman, Ohio, for US$235 million at closing.

Up to US$45 million over three years depends on financial targets and other conditions. Regulatory clearance and other closing conditions remain.

Summer Garden employs about 200 people, makes roughly 250 products and co-packs for customers. Its portfolio includes:

• Gia Russa and Little Italy in the Bronx;
• G Hughes;
• Barbecue and pasta sauces, dips, marinades and dressings.

Sales were US$148 million in the year to May 2024, with adjusted EBITDA of approximately US$27.9 million, a non-IFRS measure. Lassonde president and COO Vince Timpano sees the agreement as advancing its C$3 billion annual sales run-rate goal for the end of 2026. Lassonde makes fruit beverages, soups, broths, snacks, ciders and wine for branded and private-label customers.

Existing operations and investment plans

Lassonde’s first quarter ended on March 30, 2024. Its Canadian business implemented selling-price adjustments to offset higher input costs, particularly orange concentrates. The company attributed an improvement in gross profit partly to those price adjustments and a change in sales mix. Lower Canadian sales volumes partly offset the favourable pricing effect on revenue.

In May, Lassonde expected its new North Carolina single-serve line to be commissioned later in 2024, supporting both branded and private-label business. Its U.S. demand build-back strategy also remained in progress. The company expected additional volumes during the second half of the year, while monitoring consumer food habits and sensitivity to prices.

Earlier U.S. acquisition

Lassonde’s U.S. operations already included Old Orchard Brands, acquired in 2018. The final cash consideration was US$152.8 million, including US$2.8 million in working-capital adjustments. A further contingent payment of up to US$10 million depended on specified adjusted-EBITDA milestones over the following two years. Acquisition and financing charges paid separately amounted to US$4.2 million.

The 2018 consolidated financial statements included Old Orchard’s results from May 31 to December 31. Lassonde accounted for the business combination under the acquisition method in IFRS 3, with its annual financial statements recording the purchase and related transaction fees.