Universal Corporation announces that it has entered into a definitive agreement to acquire Silva International ("Silva"), a privately-held, natural, specialty dehydrated vegetable, fruit and herb processing company, for $170 million in cash. Following the close of the transaction, Silva will operate as part of Universal's plant-based ingredients platform, which includes FruitSmart, Inc. ("FruitSmart") and Carolina Innovative Food Ingredients, Inc. ("CIFI").
Founded in 1979, Silva procures over 60 types of dehydrated vegetables, fruits and herbs from over 20 countries around the world. In addition to sourcing, the company specializes in processing natural raw materials into custom designed dehydrated vegetable- and fruit-based ingredients for a variety of end products. Headquartered in Momence, Illinois, Silva employs over 200 people and has a 380,000 square foot manufacturing facility.
"We're excited to have reached this agreement with Silva as we continue to diversify our offerings and generate new opportunities for value creation. 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," said George C. Freeman, III, Chairman, President and Chief Executive Officer of Universal Corporation.
"With Silva as part of our plant-based ingredients platform, we will be able to offer customers a single source for vegetable and fruit ingredients solutions. Silva, FruitSmart, and CIFI all serve similar industries but have different product portfolios and minimal customer overlap. We expect to leverage significant commercial synergies between these businesses, and we are excited by the prospect of leveraging Universal's global network of hundreds of thousands of farmers to drive growth across the platform," continued Mr. Freeman. "We look forward to welcoming Silva's talented team to Universal Corporation and expect they will benefit from the resources and scale that we offer as a company with a global presence."
"For more than 40 years, Silva has consistently produced flavorful, 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 Chief Executive Officer of Silva.
Silva has established a reputation as the 'go-to' provider for 'clean', natural, specialty dehydrated vegetable- and fruit-based ingredients due to its unique competencies and significant capacity to source, process and manufacture raw materials. The Silva team has longstanding relationships with farmers and suppliers around the world and maintains strong quality control procedures, ensuring consistent, high-quality supply. Silva continually reinvests in its business and recently expanded and enhanced its manufacturing facility. As a result, the company is well positioned to take advantage of increasing demand for natural and clean-label products across the end markets it serves, including within the attractive and growing savory and pet food end markets. Silva has also demonstrated consistent, long-term revenue growth and has strong customer diversity.
Universal Corporation expects the transaction to close in October of this year, subject to customary closing conditions. 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.
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.