USA – Universal Corporation, a tobacco merchants, has entered into a definitive agreement to acquire Silva International, a US supplier of natural, specialty dehydrated vegetable, fruit and herb ingredients, for US$170 million.
Universal says that Silva is well positioned to take advantage of the increasing demand for natural and clean-label products across the end markets it serves.
Following the close of the deal, Silva will operate as part of Universal’s plant-based ingredients platform, which currently includes FruitSmart – which it agreed to buy last year – and Carolina Innovative Food Ingredients.
With Silva joining its plant-based platform, Universal says it will be able to offer customers a single source for vegetable and fruit ingredients solutions.
Universal’s recent transactions represent the agri-product supplier’s efforts to identify growth opportunities in adjacent markets and to capitalise on the plant-based ingredients market.
“For more than 40 years, Silva has consistently produced flavourful, high-quality, natural specialty ingredients to meet our customers’ specifications.”Heinz-Peter Schmidt – CEO Silva
“We’re excited to have reached this agreement with Silva as we continue to diversify our offerings and generate new opportunities for value creation,” said George Freeman, chairman, president and CEO of Universal Corporation.
“This acquisition builds on our investment in FruitSmart and expands our plant-based ingredients platform. With this acquisition, we expect these businesses to represent 10% to 20% of our EBITDA by fiscal year 2022, ahead of our previously stated target outlined as part of our capital allocation strategy.”
Following the close of the transaction, Kent DeVries, president of Silva, will continue to run the business and report to Patrick O’Keefe, senior vice president of Universal Global Ventures.
“For more than 40 years, Silva has consistently produced flavourful, high-quality, natural specialty ingredients to meet our customers’ specifications. By joining Universal, we will be able to take advantage of opportunities for collaboration and growth while remaining true to our culture and our mission,” said Heinz-Peter Schmidt, majority owner and CEO of Silva.
Founded in 1979, Silva provides a wide range of dehydrated vegetable, herb, and select fruit ingredients to the food industry for a variety of end products. Headquartered in Momence, Illinois, Silva employs over 200 people and has a 380,000 square foot manufacturing facility, which it recently expanded.
Universal Corporation anticipates this acquisition will be accretive to earnings in the first fiscal year following closing and expects to fund the transaction with cash on hand and borrowings under its committed revolving credit facility.
The Company also expects to maintain its investment grade credit rating and remains committed to increasing its quarterly dividend on an annual basis, as it has done for 50 consecutive years.
The acquisition is expected to close in October 2020, subject to customary closing conditions.
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