Canada’s Organto Foods to acquire organic herb producer
Organto Foods Inc., a leading provider of organic and value-added organic fruits and vegetables announced that it has signed a Letter of Intent (“LOI”) to acquire 100% of the outstanding shares of Fresh Organic Choice BV (“Fresh Organic”), a privately held Dutch corporation.
Fresh Organic is a provider of a wide range of year-round fresh cut organic herbs, marketed under the Fresh Organic Choice brand, with sales throughout Europe. Closing of the transaction is subject to completion of final due diligence, definitive agreements and acceptance of the TSX Venture Exchange.
Fresh Organic is based in Poeldijk, the Netherlands. The business was started in 2017 by Mr. Wilco Heemskerk, who will join Organto and lead the Company’s organic herb and taste-maker portfolios.
Fresh Organic operates an asset light business model, enabling a straight forward integration process with Organto. Fresh Organic’s fresh cut packaged herbs portfolio includes mint, oregano, basil, chives, parsley, dill, thyme, rosemary, sage, tarragon and others, sold in a wide range of branded packages. Product is sourced primarily from strategic local growers in the Netherlands, Germany, Spain, Italy, Germany and Portugal, with sourcing programs in development Tunisia and Ethiopia.
“We are extremely excited to have Fresh Organic become part of Organto, expanding our organic fruits and vegetables portfolio and leveraging the operating platform that we have been building. Growth via acquisition has been one of our stated strategies, and we are pleased to be able to announce this first transaction as we ramp-up our acquisition program.” commented Rients van der Wal, Co-CEO of Organto and CEO of Organto Europe BV.
“Wilco has built a successful business in a fast-growing category, based upon strong values and operating principles, and we are honored that he and his team will become part of Organto. By combining our collective strengths, we are confident that will be able to profitably expand our fresh herbs and taste-maker categories for years to come. We are convinced that demand for fresh cut organic herbs will continue to grow, driven by the rise in home cooking and desire for new taste sensations, combined with the desire for the unique health benefits that herbs provide.”
Wilco Heemskerk, the current owner of Fresh Organic commented, “I am extremely proud of what we have built at Fresh Organic, and am thrilled that we will continue our legacy as part of the Organto family. Organto’s vision for the future, commitment to socially responsible business practices and strategy to be a leader in fresh organic fruits and vegetables, aligns with the goals of Fresh Organic, and I could not be more pleased to be part of this vision.”
Herbs are recognized for their intense flavor and impressive nutritional profiles, including high levels of vitamins, essential minerals, antioxidants, fiber and antimicrobial properties, all considered important ingredients to boosting immunity and part of a healthy diet. With the increase in cooking at home during the COVID-19 pandemic, demand for fresh cut herbs has been strong as consumers have sought the combination of taste intensity and health benefits that herbs provide.
This trend is expected to continue as many consumers have indicated they will continue with increased healthy home cooking once the pandemic has passed.
Fresh Organic is expected to realize revenues of approximately CDN $2.1 million in calendar 2020, with strong growth projected in the future. The business is expected to be both gross margin and EBITDA accretive to Organto once the transaction has closed.
Under the terms of the LOI, at closing Organto will pay €150,000 in cash and issue common shares of Organto worth €150,000. The common shares issued will be subject to escrow provisions and become freely tradable in equal amounts over three years. In addition, the former owner will be eligible for an earn-out of up to €100,000 based on pre-established growth targets to be met over a three-year period.
