The assets include machinery, molds and a 42,000 square foot manufacturing facility, all located on 2.31 acres of land in the Greater Toronto Area of Brampton, Ontario.
Shepherd designs custom packaging including engineering, mold production and final product manufacturing for both thin gauge and heavy gauge applications.
Their customers include several Fortune 500 companies located throughout eastern Canada and the northeast United States.
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Shepherd operates six different thermoforming lines as well as two CNC machines at its fully integrated design, mold manufacturing, testing and manufacturing facility.
“After nearly doubling our revenues in 2019, this transaction marks another significant milestone in the company’s growth trajectory. The acquisition enables us to increase our production capacity and expand our plant-based packaging assortment to meet the needs of more customers,” said Paul Antoniadis, CEO of good natured®. “Whether it be through existing molds available at the Shepherd facility, or the ability for us to expand on the development of custom packaging solutions, one of our largest growth sectors, our production capacity and assortment has now increased significantly.” Paul went on to add “the strategic location of Shepherd’s facility also provides good natured® with a strong and easily accessible entry point into Ontario and eastern Canada, as well as the northeastern United States.”
Paul concluded by saying, “We’re delighted to welcome Mark and Todd Shepherd and the entire Shepherd team to the good natured® family. We share a common vision to be leaders in the development and adoption of sustainable, planet-friendly packaging solutions in North America, so the combination of our collective expertise, people and manufacturing capability further positions the Company to execute against this ambition.
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Shepherd generated average annual revenue of over CAD$5.5 million and average annual adjusted EBITDA of CAD$420,000 in the prior three fiscal years.
Completion of the Share Purchase remains subject to financing and a number of customary closing conditions in favor of good natured® and TSX Venture Exchange approval.
The acquisition is expected to be accretive during the current fiscal year.
The Company is completing the final stages of financing required to close the Share Purchase with its financial partners, including Business Development Bank of Canada (“BDC”), under the terms and conditions of its previously announced BDC financing from June 2019.
“We are very excited to partner with good natured® and continue the legacy of our business that was started in 1984 by our father Barry Shepherd,” said Todd Shepherd, President of Shepherd Thermoforming & Packaging Inc. “Our customers are increasingly requesting plant-based alternatives, so joining together with good natured®, as we have on several projects over the past four to five years, will accelerate our ability to meet this growing demand.”
The closing of the transaction is expected to be not later than April 30, 2020.
In addition to the $9.5 million payable in cash at closing, the Share Purchase contemplates an earnout payment of $2.25 million may be payable at some point between 42 and 60 months post-closing, upon satisfaction of a condition relating to increase in the value of the real estate purchased as part of the transaction.
The Company also intends to redeem the remaining $1.18 million in principal amount of its convertible debentures issued February 2018 at the closing of the transaction.
The definitive agreement governing the Share Purchase will be available on the Company’s SEDAR profile at http://www.sedar.com subsequent to closing the transaction in accordance with TSX filing regulations.
Published on goodnatured.ca