Why Farmer Brothers Shares Are Jumping Today

  • Treehouse Foods Inc THS inked a deal with Farmer Brothers Company FARM to acquire certain assets for around $100 million, subject to customary purchase price adjustments.
  • As per the deal, TreeHouse will buy FARM's Northlake, Texas, coffee facility and non-Direct Store Delivery coffee business. The transaction is expected to close in the next 60 days.
  • Farmer Brothers intends to use the proceeds to pay down outstanding debt associated with its asset-based lending (ABL) and retire its term loan.
  • Farmer Brothers CEO Deverl Maserang, said, "With a sole focus on DSD, we will be able to realize even greater internal efficiencies and cost savings, while also better serving our largest, most profitable customer base."
  • Following the sale of its Northlake, Texas facilities, Farmer Brothers expects its annual revenue will be approximately $350 million with vastly improved product margins.
  • The acquisition will boost THS' single-serve pod and ready-to-drink coffee businesses and enhance its end-to-end private-label coffee offerings.
  • FARM has been THS's supplier of bulk ground coffee for its single-serve pods and ready-to-drink beverages. 
  • Following acquisition closure, THS plans to retain around 180 FARM employees at the facility.
  • As of March 31, 2023, THS held $14.63 million in cash and equivalents.
  • Price Action: FARM shares traded higher by 59% at $3.07 premarket on Wednesday.
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