Poore Bros. Acquiring Mrs. Fields Brand Licenses
Poore Brothers Inc. announced the signing of a non-binding letter of intent to acquire certain assets and liabilities of Shadewell Grove Foods Inc., and Shadewell Grove IP LLC (collectively "Shadewell") including the Mrs. Field's licenses to produce and sell ready-to-eat cookies, baking chips, brownies and toppings through grocery, drug, club, mass and convenience store channels. The letter of intent is non-binding, and there can be no assurance that the acquisition will be completed or that it will be completed on the terms and conditions contained in the letter of intent.
Thomas W. Freeze, president and chief executive officer, commented, "We believe this is an excellent fit with our strategic plan, because the Mrs. Field's brand is nationally recognized for quality cookie products, and there are many business synergy opportunities. Shadewell currently sells its products in many of the same distribution channels that we do, and they sell in several countries internationally. Shadewell utilizes excellent co-packers to make their products, and our goal is to combine warehousing and distribution for added efficiency gains. We believe that this acquisition would be accretive after the initial integration phase."
The Mrs. Field's licenses are currently the subject of litigation in the Delaware Chancery Court between Shadewell and Mrs. Fields, and the closing of the acquisition is intended to be conditioned upon the company's satisfaction with matters relating to the litigation. The company is not a party to the pending legal matters. Completion of the acquisition is also subject to the signing of a definitive purchase agreement, completion of the financing for the transaction and fulfillment of other closing conditions to be contained in the definitive purchase agreement. A closing is planned within 30 days.
The company is purchasing agreed upon assets and liabilities, including the Mrs. Fields licenses and certain tangible assets consisting principally of inventory and accounts receivables with minimal fixed assets. The purchase price consists of $3 million at closing and a note for $22 million. The principal amount of the note is subject to reduction to the extent gross revenue levels in 2005 for the acquired business are less than $44 million, and working capital for the acquired business at the closing date is less than $2 million. The company's obligation to pay the note is entirely contingent on a satisfactory resolution of pending legal matters relating to the Mrs. Fields licenses, which could come after closing. The company plans to finance this acquisition with existing cash and new bank debt.