UNFI to buy rival N.J. food company for $217.5M

PROVIDENCE – United Natural Foods Inc. has entered into an agreement to acquire Haddon House Food Products Inc. for approximately $217.5 million.
UNFI, which carries and distributes more than 85,000 natural, organic and specialty food products to more than 40,000 customers throughout the United States and Canada, made the announcement about the acquisition of the Medford, N.J., company on Monday.
Haddon House, according to its website, billed itself as the largest privately-owned distributor, importer and exporter of specialty, natural, organic, ethnic and kosher foods. It was founded in 1960, and its customer base includes supermarkets, gourmet food stores and independent retailers.
The agreement included all outstanding stock of Haddon House Food Products Inc. and certain affiliated entities as well as certain real estate, according to UNFI.

“Haddon House has a unique product and service offering that we expect to play an important role in our ongoing strategy to build out UNFI’s gourmet and ethnic product categories across the country,” Steven Spinner, UNFI’s president and CEO, said in a statement. “The Haddon House team has demonstrated exemplary customer service and growth over the last decade while also building a distinctive private label brands business. We are excited to have them join the UNFI family as we venture into new channels and markets together.”
David Anderson, president, Haddon House Food Products, said the transaction will provide the company with greater resources to further develop products and broaden its geographic reach.
The transaction is expected to close at the beginning of the fourth quarter, at which point Haddon will operate as a wholly-owned subsidiary of the company. UNFI expects to finance the purchase price with both cash and borrowings under its revolving credit facility.
In other news, UNFI reported preliminary second-quarter fiscal 2016 earnings, in advance of its March 7 release date.
UNFI said for the second quarter that ended Jan. 30, it is expecting sales of about $2 billion, a 1.5 percent increase from a year ago, and earnings per share between 43 cents and 45 cents compared with earnings per share of 55 cents a year ago.
Said Spinner, “Our updated results reflect the rapidly changing near term industry dynamics facing UNFI and its constituents. We have made significant progress in developing our fresh platform, e-commerce, brands and infrastructure. UNFI’s second quarter preliminary results and our view of fiscal 2016 reflect our commitment to investing in growth throughout our organization while we continue to evaluate our cost structure and customer experience.”
The company also lowered its outlook for the remainder of fiscal 2016, saying it expects sales in the range of approximately $8.31 billion to $8.43 billion, an increase of approximately 1.5 percent to 3 percent compared with fiscal 2015. Earnings per share also are expected to be between $2.27 and $2.37, versus earnings per diluted share of $2.76 last year.

Previously, UNFI said it was estimating full-year sales between $8.4 billion and $8.59 billion, an increase of 3 to 5 percent compared with 2015’s numbers, and earnings between $2.79 and $2.89 per share.

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