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Kehe strikes deal to buy Tree of Life |
| Deal gives Kehe a foothold into the Canadian specialty food market |
01.08.2010
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By Anna Wolfe
ROMEOVILLE, Ill.-Kehe Food Distributors Inc. has agreed to pay $190 million cash to acquire its competitor Tree of Life Inc.
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Included in the deal are 13 distribution centers-10 in the U.S. and three in Canada.
At press time, the deal was expected to close early in 2010. Terms were disclosed Dec. 23 by Tree of Life's parent company, Royal Wessanen nv that is publicly traded on the Amsterdam stock exchange. According to Reuters, Tree of Life was expected to fetch a higher sale price, and the Dutch company said it would lose $72 million on sale.
"Kehe believes in identifying and filling the product and service needs of retail partners. The combined company will be better suited than ever to fulfill this vision, for retail partners ranging from the smallest independent grocer or natural food store to the largest national chain," said Brandon Barnholt, president and CEO of Kehe, in a prepared statement.
Kehe, which is an employee-owned company, distributes specialty, gourmet and ethnic products to retail grocery stores of all sizes in all 50 states, as well as Mexico and the Caribbean. Through its acquisition of Tree of Life, it gains distribution and facilities in Canada.
One of Tree of Life's core customer groups is the independent retail channel. "It is obvious to me that Kehe is excited by Tree of Life's strong presence as a distributor to natural food stores and wants to see their business in that class of trade grow significantly in the coming years. Given that there are unmet retailer needs in the marketplace, the new company has tremendous opportunities for growth," said Greg Leonard, Tree of Life's senior vice president of natural food sales, in a prepared statement.
When Wessanen purchased the company in 1985, Tree of Life had grown from a single, independent natural food store in Florida in 1970 into a natural and organic distributor in the Southeast. After becoming part of Wessanen, the company continued to expand, becoming a national player in the natural, organic and specialty food distribution business. Tree of Life now operates 10 distribution centers in the United States and three in Canada and has about 300 employees.
When asked about an approximate selling price, Leonard said in a May 2009 interview with Gourmet News, he wasn't sure of a dollar figure and added the distributor "has a lot of value" because of the size and scope of the operation.
"From 40,000 feet, our business seems to be quite simple, just trucks, warehouses and cases. The complexity, though, comes from offering 50,000 SKUs, provided by over 3,000 suppliers and servicing 17,000 retail stores a week. That kind of infrastructure takes many years to build," he said in the May 2009 issue of Gourmet News. "A company with that kind of infrastructure already in place has a lot of value."
As part of its sell-off of its U.S.-based assets, Wessanen announced last February it would sell its American Beverage Corp., a non-carbonated beverage company.
Gourmet News was unable to reach spokespeople for the two companies for additional comments before press time.
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