v3.25.2
ACQUISITIONS
 6 Months Ended
Jun. 30, 2025
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]  
ACQUISITIONS
6. ACQUISITIONS

Acquisition of Private Brand Tea Business

On January 2, 2025, the Company completed the acquisition of certain subsidiaries that operate the private brand tea business of Harris Freeman & Co, Inc. ("Harris Tea"), a leading private brand tea manufacturer in the U.S., for approximately $207.6 million in cash, subject to customary purchase price adjustments. In addition to private brand tea, Harris Tea manufactures specialty retail tea brands and foodservice tea products for the restaurant and hospitality industries. The acquisition aligns with our long-term strategy to build capabilities in our higher-growth, higher-margin categories.

The acquisition is being accounted for under the acquisition method of accounting, and the results of operations were included in our Condensed Consolidated Financial Statements from the date of acquisition. Included in the Company’s Condensed Consolidated Statements of Operations are Harris Tea’s net sales of approximately $74.1 million and income before income taxes of $4.3 million from the date of acquisition through June 30, 2025. The Company incurred approximately $3.2 million in acquisition-related costs, of which $0.2 million and $0.5 million were incurred during the three and six months ended June 30, 2025, respectively. These costs are included in General and administrative in the Condensed Consolidated Statements of Operations.

The following table summarizes the preliminary purchase price allocation of the fair value of net tangible and intangible assets acquired and liabilities assumed:
(In millions)
Cash transferred at close
$209.6 
Preliminary purchase price adjustment
(2.0)
Total consideration transferred$207.6 
Allocation of consideration to assets acquired and liabilities assumed:
Cash
$0.3 
Receivables
11.4 
Inventories41.8 
Property, plant, and equipment
19.0 
Operating lease right-of-use assets
25.7 
Goodwill69.7 
Customer relationships65.0 
Trademarks
12.9 
Other assets0.6 
Assets acquired246.4 
Assumed liabilities(38.8)
Total purchase price$207.6 

The acquired receivables includes gross amounts due of $11.4 million which were determined to be collectible. The operating lease right-of-use assets acquired of $25.7 million includes a $6.5 million off-market lease fair value adjustment. The intangible assets acquired include $65.0 million of customer relationships with an estimated life of 20 years and $12.9 million of trademarks with an estimated life of 10 years. The aforementioned intangible assets will be amortized over their estimated useful lives. The Company increased the cost of acquired inventories by approximately $1.9 million and expensed this amount as a component of Cost of sales during the during the first quarter of 2025, for the amortization of the inventory fair value step up adjustment. The Company recognized $69.7 million of goodwill relating to the acquisition. The primary factors that contributed to the recognition of goodwill are growth opportunities provided by vertical integration and customer synergies from its existing coffee and tea businesses. The goodwill resulting from this acquisition is tax deductible, as it is considered an asset acquisition for tax purposes.
Personal property fair values were determined using the cost approach, and the real estate lease fair values were determined using the income approach. The fair values for customer relationships at the acquisition date were determined using the excess earnings method under the income approach, while trademark fair values were determined using the relief from royalty method. The fair value measurements of intangible assets are based on significant unobservable inputs, and thus represent Level 3 inputs. Significant assumptions used in assessing the fair values of intangible assets include discounted future cash flows, customer attrition rates, and royalty rates.

The purchase price allocation in the table above is preliminary and subject to the finalization of the Company's valuation analysis.

The following unaudited pro forma information shows the results of operations for the Company as if its Harris Tea acquisition had been completed as of January 1, 2024. Adjustments have been made for the pro forma effects of depreciation and amortization of tangible and intangible assets recognized as part of the business combination, the amortization of the inventory fair value step-up, the amortization of off-market lease adjustments, acquisition-related costs, and related income taxes. The pro forma results may not necessarily reflect actual results of operations that would have been achieved, nor are they necessarily indicative of future results of operations.

Three Months Ended June 30, 2024Six Months Ended June 30, 2024
(Unaudited, in millions)
Pro forma net sales
$823.0 $1,679.9 
Pro forma net loss
(14.8)(28.1)

Acquisition of Pickle Branded Assets

On January 2, 2024, the Company completed the acquisition of pickle branded assets, including Bick’s pickles, Habitant pickled beets, Woodman’s horseradish, and McLarens pickled onions brands (the "Pickle Branded Assets"), from The J.M. Smucker Co., a North American producer of coffee, consumer foods, dog snacks, and cat food. The acquisition is consistent with our strategy and builds depth in our Pickles category by expanding into Canada. The total purchase consideration transferred was approximately $25.9 million in cash. The purchase of the Pickle Branded Assets was accounted for as an Asset Acquisition.

The following table summarizes the purchase price allocation of the fair value of net tangible and intangible assets acquired:

(In millions)
Cash transferred at close$20.0 
Purchase price adjustment5.9 
Total consideration transferred$25.9 
Allocation of consideration to assets acquired:
Inventories$25.2 
Trademarks0.7 
Total purchase price$25.9 

Intangible assets acquired included trademarks with an estimated life of 10 years.