Farmer Bros. Co. has entered into an agreement to acquire substantially all the assets of Boyd Coffee Company with a combination of cash and stock.
Boyd’s is a privately-held company in business for over 100 years with a national reputation in the coffee industry. Boyd’s business model is expected to be complementary to Farmer Brothers across customer channels, product portfolios and distribution networks, including a high-touch service model of direct-store-delivery. Boyd’s generated revenue of approximately $95 million and processed and sold about 16 million pounds of green coffee during the previous 12-month period. Boyd’s coffee sales accounted for approximately 65 percent of revenue with the remainder of revenue primarily coming from other beverages and accessories.
Farmer Bros. expects to improve overall operational efficiency by moving the production volume associated with the acquired Boyd’s business into its existing production facilities. The transition and integration of the Boyd’s business is expected to take place over the next 12-18 months.
“We believe the Boyd’s business will be an excellent strategic fit for Farmer Brothers,” said Mike Keown, Chief Executive Officer of Farmer Brothers. “We expect this acquisition will strengthen our position in the marketplace, expand our distribution footprint, and generate significant synergies.”
“We are confident Farmer Brothers is the right company to take the Boyd’s brand to the next level,” said Jeffrey Newman, Chief Executive Officer at Boyd’s. “We look forward to a smooth transition and providing the same high quality customer service that has been a hallmark of the Boyd Coffee Company for over 100 years.”
Randy Clark, Chairman of the Board at Farmer Brothers, noted, “We believe Farmer Brothers is in a strong position to benefit from ongoing coffee industry consolidation by executing accretive acquisitions. Coming off the successful acquisitions of China Mist and West Coast Coffee, the Boyd transaction is another opportunity to advance Farmer Brothers’ long term growth plans.”
Terms of Transaction
The purchase price consists of up to $42 million in cash and 21,000 shares of a new series of preferred stock, subject to adjustments for working capital and certain hold-backs of cash and stock. As of the signing date, the preliminary estimated value of the preferred stock is $16.6 million or $789 per share, leading to an estimated value of the aggregate purchase price of $58.6 million.
Boyd’s generated revenues of approximately $95 million during the period from August 1, 2016 through July 31, 2017. Once fully integrated, Farmer Brothers currently expects the transaction to deliver between $13 to $16 million1 in annual incremental adjusted EBITDA. One-time costs associated with the transaction, including professional fees, integration expenses and employee-related fees are expected to be approximately $9 to $11 million, and capital expenditures are expected to be approximately $8 to $11 million through completion of integration, which is expected to be completed in approximately 12 to 18 months.
The transaction is expected to close in the fourth quarter of calendar 2017 (which is the second quarter of fiscal 2018 for Farmer Brothers), subject to certain closing conditions.
Rogue Ales & Spirits, the country’s only brewery-distillery-cooperage, announces the release of 2017 Rolling Thunder Imperial Stout. Brewed with ingredients grown at Rogue Farms and ocean aged in Dead Guy Whiskey-soaked handmade Oregon Oak barrels coopered at Rogue’s Rolling Thunder Barrel Works, Rolling Thunder Imperial Stout is the culmination of a long journey from bark to bottle. In 2015 Rogue acquired vintage, WW II era, coopering equipment and subsequently established Rolling Thunder Barrel Works to take on the ancient art form of barrel making. Using Oregon Oak, Rogue’s cooper Nate Lindquist assembles, raises, toasts, chars, hoops, cauterizes, sands and brands one barrel a day, all by hand.
“At first it was a creative challenge,” said General Manager Dharma Tamm, “to see how we could incorporate our brewery, distillery, cooperage and farm into one beer. However, our brewers, distillers, coopers, farmers – and even graphic designers turned it into a quest to create a world class beer that exemplifies the Rogue spirit of challenging the norm and pushing creative boundaries.”
Black with a creamy head, Rolling Thunder Imperial Stout features deep sherry notes accentuated by hints of coconut, cherries, dark fruit and vanilla held up against a dark roasted malt backbone with earthy hops. At 14 percent alcohol, this year’s Rolling Thunder is bigger and bolder than the inaugural 2016 release. Limited quantities of Rolling Thunder Imperial Stout will be available on draft and in 1-liter swing-top bottles at Rogue public houses starting July 21, then at select retailers nationwide on August 1. For more information visit Rogue.com.
By Lorrie Baumann
Top Note tonics are attracting attention among the fans of craft beverages, most recently with a sofi Award for Top Note Indian Tonic Water, named the best new product in the cold beverages category by the Specialty Food Association this year. The company’s other products include a Ginger Beer as well as a range of other European-style tonics in Bitter Orange, Bitter Lemon and Gentian Lime flavors.
Top Note tonics are produced by La Pavia Beverage, LLC, founded in 2014 by Mary Pellettieri and her husband and partner, Noah Swanson and headquartered in Milwaukee, Wisconsin. “We decided to go into this business because we were very intrigued by craft beer,” Pellettieri says. “As I was concocting and crafting some syrups for that, using traditional recipes, I found that I liked the syrups just with carbonated water.”
Pellettieri’s interest in beer was long-standing. She began her career at the Siebel Institute of Technology, a research institute and school of brewing technology founded in Chicago in 1868, where she was a chemist and microbiologist and taught sensory management. Her career has taken her from there to Silliker Labs, Goose Island Beer Company and then MillerCoors before she left the brewery giant to start her own company. After more than 20 years of working with craft beers, she was in an ideal position to recognize the potential of the beverage she’d created. “To me, it’s more than just a mixer. It could be an herbal soft drink on its own,” she said. “It’s a radler [also known as a shandy] when mixed with beer.”
Pellettieri’s experience had taught her to appreciate the tonics she’d tasted in Europe, where the category was burgeoning with many more products and flavors than were being offered to the American market, where tonics tended to have harsher flavors that could mask the rasp of alcohol when they were mixed into cocktails based on mass-marketed spirits. But after distillers of craft spirits began producing smoother liquors, there was no longer as much need to hide the harsh taste of the alcohol. Pellettieri figured that created a gap in the market for mixers with bright, clean flavors, including the herbal elixirs that she loved.
“We just saw that the category of sparkling beverage needing some innovation, some dusting up,” she said. “I just thought: Why not someone who understands bitter, who understands beer? Why not me?”
“The tonic category in the States has been sleepy,” she added. “If you go to Europe you’ll see that it’s much more of a burgeoning category and much more diverse in its offerings.”
The Top Note product line started with mixable syrups that could be added to cocktails, stirred into sparkling water to make a soda or drunk on their own. “It’s still a tonic, and there’s still some bitterness to it, so I always warn people. Tonic lovers really love it,” Pellettieri said. “It’s still true to the tradition that a tonic is a bitter, sour and sweet beverage.”
The Top Note tonics pair well with the same kind of foods that complement other bitter beverages like an IPA beer or a dark espresso, and Pellettieri has recently expanded the line by packaging the tonics in four-packs of ready-to-serve bottles and adding a Ginger Beer that can be consumed either as a mixer or on its own. “We designed it with the idea that flavor is most important,” Pellettieri said. “That’s selling out faster than we can keep up with right now.”
The Top Note tonics are currently being distributed locally in Milwaukee and Madison, Wisconsin, where they’re in both liquor and specialty grocery stores, but the products have also recently launched through KeHE. The Top Note Indian Tonic Water will be in the sofi Award showcase at the Summer Fancy Food Show, and Pellettieri plans to exhibit her line at the Winter Fancy Food Show in 2018. She says her production line is scalable for the orders that the sofi Award and the KeHE launch are bound to bring. “We’re ready,” she said. “We are ready. Everything’s in place.”