WATERBURY, Vt. -- Green Mountain Coffee Roasters Inc. (GMCR) said that it has executed a share purchase agreement to acquire all the outstanding shares of LJVH Holdings Inc., parent of Van Houtte Inc., from an affiliate of Littlejohn & Co. LLC, a private-equity firm headquartered in Greenwich, Conn., for a cash purchase price of $890 million.
The transaction is subject to customary closing conditions, including certain regulatory approvals, and is expected to close by the end of calendar year 2010.
"We have had a strong and mutually beneficial relationship [image-nocss] with Van Houtte since 2001 when they first became a Keurig licensee and we're confident that the company and its well-known Canadian brands including Van Houtte, Brulerie St. Denis, Les Cafes Orient Express Coffee and Brulerie Mont Royal are great additions to GMCR and our family of specialty coffee brands," said Lawrence J. Blanford, president and CEO of GMCR. "We believe that Van Houtte, in combination with our Green Mountain Coffee, Tully's, Timothy's and Diedrich's brands, will contribute to our future success in Canada and throughout North America."
Headquartered in Montreal, Van Houtte is a leading gourmet coffee brand in Canada in the home and office channels. Van Houtte roasts and markets gourmet coffee for home and office consumption and distributes it through its direct-to-store delivery and coffee services networks in Canada and the United States.
Van Houtte's last 12 month's net sales as of August 21, 2010, were $433 million. Van Houtte produces specialty coffee, tea and other beverages in a variety of packaged forms including K-Cup portion packs for the Keurig Single-Cup Brewing System sold under the Van Houtte, Bigelow and Wolfgang Puck K-Cup brands. It employs approximately 1,700 people in Canada and the United States.
"This acquisition will enhance GMCR's Canadian presence and is expected to strengthen our North American geographic expansion with a well-known Canadian brand platform that includes roasting, manufacturing and distribution capabilities," Blanford added. "We have great admiration for Van Houtte's leadership team and are pleased that its current president and CEO, Gerard Geoffrion has agreed to continue to lead the Van Houtte business in Canada following the close of the acquisition."
Geoffrion said, "As a result of our long-term relationship as a Keurig licensee, we know there is a strong cultural and strategic fit between GMCR and Van Houtte. We believe the combination of our brands, employees and our respective geographic strengths makes for a stronger overall company and will enable us to continue to grow our presence in Canada."
GMCR intends to finance the acquisition through a combination of cash on hand and $1.35 billion of new debt financing comprised of a $750 million five-year senior secured revolving credit facility, a $250 million five-year senior secured term loan A facility and a $350 million six-year senior secured term loan B facility. These facilities will be used to finance this acquisition and transaction expenses, as well as to refinance GMCR's existing outstanding indebtedness and support our ongoing growth. The company has secured a financing commitment for the transaction from BofA Merrill Lynch and SunTrust Robinson Humphrey Inc.
Waterbury, Vt.-based GMCR anticipates that the acquisition will be neutral to slightly dilutive to its earnings per share in the first 12 months after closing and accretive thereafter.
Subsequent to the closing of the transaction, GMCR anticipates conducting a strategic review of Van Houtte's U.S. Coffee Services business (Filterfresh) in contemplation of a potential divestiture of Filterfresh given GMCR's current sales and marketing structure and its existing network of independent Keurig authorized distributors throughout the United States. The proceeds from any divestiture would be used to reduce GMCR's outstanding indebtedness.
As a leader in the specialty coffee industry, GMCR is recognized for its coffees, brewing technology and socially responsible business practices. GMCR's operations are managed through two business units. The Specialty Coffee business unit produces coffee, tea and hot cocoa from its family of brands, including Tully's Coffee, Green Mountain Coffee, Newman's Own Organics coffee, Timothy's World Coffee and Diedrich, Coffee People and Gloria Jeans, a trademark licensed to the company for use in North America and owned by Gloria Jeans Coffees International Pty. Ltd. The Keurig business unit is a leading manufacturer of gourmet single-cup brewing systems. K-Cup portion packs for Keurig Single-Cup Brewers are produced by a variety of roasters, including Green Mountain Coffee, Tully's, Timothy's and Diedrich.
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