Global Organic and Plant-Based Leader SunOpta Sells Off Ingredients Business for $390M

Nearly two years after selling its organic soy and corn business to Pipeline Foods for $66.5 million, SunOpta continues to slim down with the sale of Tradin - its global ingredients business - to commodities trader Amsterdam Commodities (Acomo) in a deal worth $390 million.

Based in Canada, SunOpta is a leading global company focused on plant-based foods and beverages, fruit-based foods and beverages, and the sourcing and production of organic ingredients.

It is this ingredients unit that posted sales of $488 million for the 12 months to September 26 that moved the company to jettison in favor of greater concentration on value-added, plant-based foods and beverages.

The value of the deal reflects an approximate 10X multiple of adjusted EBITDA for the ingredients business. Also, as highly tax efficient, it is expected to be accretive to the company’s long-term growth rate and margin profile, providing greater stability and financial consistency.

Additionally, the company stated that the move will also reduce its exposure to the volatility of commodity trading while strengthening long-term margins and growth rates.

“I’m pleased to announce this strategically transformational transaction,” said Joe Ennen, CEO, SunOpta. “This transaction further solidifies SunOpta’s future direction as a high-growth, plant-based company focused on providing value-added products in competitively advantaged categories with consistent, sustainable, above-average growth characteristics.”

As part of the terms of the deal, which Ennen said “de-levers and strengthens SunOpta’s balance sheet”, SunOpta has signed an agreement with Acomo to continue supplying the organic ingredients it sources.

The long-term supply agreement negotiated as part of this transaction provides SunOpta with the benefit of a continued strategic relationship with a leading global ingredient player in Acomo,” said Ennen.

The deal also calls for the sale of SunOpta’s processing facilities in Amsterdam, the Netherlands, Silistra, Bulgaria, Addis Ababa, Ethiopia, and Yirgalem, Ethiopia. These facilities and the 525 employees connected with them will continue to operate as usual through the transfer from SunOpta to Acomo.

“With the exciting acquisition of Tradin, Acomo will realize a highly complementary acquisition, creating a leading global player across organic and conventional unlisted commodities,” said Allard Goldschmeding, managing director, Acomo Group. “The company is a leading partner for the organic food industry, benefitting from the rapidly growing global consumer demand for sustainable and healthy foods. Tradin has an attractive financial profile and will continue to be led by a highly experienced management team.”

Although SunOpta didn’t reveal the details of its plans for a plant-based business expansion, company CEO Ennen did say, “The plans include both high-return capital investment projects, as well as synergistic acquisitions, that add to an existing set of strong capabilities in our core plant-based beverage platform. This is a very exciting time for us at SunOpta as we look forward to building on our success of the past four quarters.”

Slightly more insight was provided when Ennen told Food Navigator-USA, “Potential avenues would be exploring acquisitions that would deepen or strengthen our current business model - so businesses that look a lot like what we do today.” He added that new directions could take the company outside the U.S. market, and or into expansions in regard to their customer base or categories such as plant-based dairy products such as cheese, yogurt, or ice cream.

SunOpta already is a provider of soy, oat, and hemp bases for the production of plant-based dairy alternatives in the categories. It also supplies plant-based powders sourced for their fiber and protein content for the production of beverages, snacks, and baked goods. However, with the capital from this sale, SunOpta could have the means to follow ADM’s lead and expand beyond commodities into being a value-added supplier for the lucrative alternative meat sector.