FDBusiness.com

Hawkins, Inc. announced that it has entered into a definitive agreement under which Hawkins has agreed to acquire Stauber Performance Ingredients from ICV Partners II, L.P. and its other shareholders in a cash for stock transaction.

Founded in 1969, Stauber offers specialty products and ingredients to the nutritional, food, pharmaceutical, cosmetic and pet care industries with approximately 160 employees, and facilities in California and New York.

“We are extremely pleased to be welcoming a company of Stauber’s caliber into the Hawkins organization. This acquisition marks the largest in Hawkins’ history, and it is transformational for us. We have previously stated our intent to expand our portfolio of value-added specialty products within new markets. Today’s announcement accelerates that strategy. Hawkins will gain a wider array of products and a customer base outside of our traditional focus. At the same time, Stauber’s distribution model is one we know well. With Hawkins’ long-term perspective and available capital, we can make key growth investments to maximize the significant potential we see with this new business segment,” said Patrick H. Hawkins, Chief Executive Officer of Hawkins.

Mr. Hawkins continued, “Stauber shares our value of placing the customer first and has built a high-quality dry blending and distribution business focused on a broad spectrum of solutions serving a wide-breadth of long-term, brand-name customers. I have had the pleasure of spending time with many of the Stauber leaders during the acquisition process and, like Hawkins, the quality of their people and their laser-like focus on providing quality products to a loyal customer base is why they have been so successful.”

Dan Stauber, Chief Executive Officer of Stauber, added, “My father started this business over 45 years ago, and I am very pleased with the opportunity for the Stauber business to increase its growth within the Hawkins organization. We found that Hawkins shares our mission–supplying high quality ingredients and innovative solutions with an exceptional level of customer service while constantly striving to maximize shareholder value for the business. We also share similar cultures — conducting business with full transparency and placing a high value on our employees and recognizing their importance to our success. Both companies are committed to a seamless transition for our customers, suppliers and employees.”

Stauber generated revenues of approximately $117 million for the twelve months ended September 30, 2015. Hawkins has agreed to pay $157 million, subject to customary purchase price adjustments, to acquire the issued and outstanding shares of Stauber on a cash-free, debt-free basis. To fund the acquisition, Hawkins intends to use cash on hand and has secured a committed financing facility with U.S. Bank National Association and JP Morgan Chase Bank, N.A. The transaction is subject to customary closing conditions, including clearance under the Hart-Scott-Rodino Antitrust Improvements Act, and is expected to close in late December.

Key investment highlights include:

• The acquisition is expected to be accretive to Hawkins’ earnings per share in year one post-transaction, with gross margins comparable to Hawkins
• Stauber has consistently generated strong cash flows from operations and has had relatively low annual capital expenditure requirements
• Stauber provides a broad business portfolio with extensive and diversified products for the food/dietary supplement market
• Stauber has become a highly-trusted, innovative ingredients supply chain partner to a fragmented universe of domestic and international raw material suppliers and downstream manufacturers and marketers
• Stauber’s dry processing and blending capabilities complement Hawkins’ liquid blending business and, when combined with a broad range of value-added services, provide total solutions to a wide breadth of long-term, brand name customers
• Similar to Hawkins, Stauber excels at its distribution and sourcing core competencies and has developed long-term, loyal customer and supplier relationships

Hawkins founded in 1938, is a formulator, manufacturer, blender, distributor, and sales agent for thousands of industrial chemicals and reagent grade laboratory chemicals sold to municipalities and businesses throughout the Central United States.