Whole Earth Brands, Inc., a global food company enabling healthier lifestyles by providing access to premium plant-based sweeteners, flavor enhancers and other foods through a diverse portfolio of trusted brands and delicious products, announced that it has executed a definitive agreement to acquire all of the issued and outstanding capital stock of WSO Investments, Inc., the holding company for Wholesome Sweeteners Incorporated, an organic sweetener brand in North America. The transaction has been unanimously approved by Whole Earth Brands’ and Wholesome’s boards of directors.
The initial purchase price for the transaction is $180 million in cash. Management expects that this acquisition will be immediately accretive to earnings following the closing. The transaction is expected to close during the company’s first quarter 2021, contingent on completion of a customary review under antitrust laws, including the Hart-Scott-Rodino (HSR) Antitrust Improvements Act of 1976 in the US.
Wholesome is the US leader in organic, plant-based and fair-trade certified sweeteners, including sugar, honey, agave nectar, allulose and other liquid sweetener products. With a proven track record of sustainability, innovation and profitable growth, including several new product lines that have been launched in the past few years, Wholesome has been a leader in fair trade, non-GMO organics, staying on the cutting edge of eco-friendly agriculture since its founding in 2001. Wholesome holds a 76% share in the organic granulated sugar segment of the organic and natural channel and has achieved retail sales growth of approximately 52% over the 52-week period ending November 1, 20201.
Strategic and Financial Highlights
Provides Access to Large & Growing Organic Sugar Category: Organic sugar consumption is growing at 1.5x the rate of conventional sugar in the United States3. There are no domestic sources of organic sugar capable of supporting domestic demand and Wholesome is the largest single importer and consumer of organic sugar in the United States, representing more than one-third of imported volume into the United States annually.
Further Expands Whole Earth Brands’ Scale in the Natural Category: Including proforma contribution of Wholesome and the company’s recent acquisition of Swerve, L.L.C. and Swerve IP (collectively, “Swerve”), natural sweeteners represent approximately 87% of Whole Earth Brands’ US Branded CPG sales mix and 72% of Whole Earth’s global Branded CPG sales mix. Whole Earth Brands’ North American Branded CPG segment proforma net sales are expected to be approximately $2902 million and its share of natural sweeteners is expected to increase by an additional 2.8 points to 14.5%, proforma for Wholesome for the last 52-week period ended November 2020.
Strong Brand Portfolio and Blue-Chip Customers Create Diversified Cash Flow Stream with High Free Cash Flow Conversion: Wholesome’s business has excelled within the natural channel with a product portfolio that spans branded retail, ingredients and private label. Wholesome has deep and tenured customers who are the market leaders across diverse food retailing and consumer products channels. Wholesome’s asset-lite production network aligns well with Whole Earth Brands’ global infrastructure and similarly generates high free cash flow conversion, with annual capex requirements similar to Whole Earth Brands.
Creates a Platform That Has Nearly Doubled Since Business Combination and Will Generate Proforma Revenue of Approximately $500 million2. The combination of Whole Earth Brands’ legacy businesses, its recent acquisition of Swerve and the pending acquisition of Wholesome creates a platform with significant global scale and provides opportunities for strong operational synergies. The expanded portfolio of brands significantly improves the company’s shelf presence and visibility with retail customers.
1 SPINS – Natural channel
2 Represents 2020E, giving effect to the Wholesome and Swerve transactions as if they had occurred on January 1, 2020
3 Nielsen L52W through 9/26/20, Calendar Year 2019
Whole Earth Brands, Inc. to Acquire Wholesome Sweeteners
The initial purchase price for the transaction is $180 million in cash
