Universal Corp. to acquire dehydrated foods company for $170M

Richmond-based international tobacco leaf supply company Universal Corp. announced Tuesday it has entered into a definitive agreement to acquire Momence, Illinois-based dehydrated vegetable, fruit and herb processing company Silva International for $170 million in cash.

Following the transaction, Silva will operate as part of Universal’s plant-based ingredients platform, which includes FruitSmart Inc. (which Universal acquired in January) and Carolina Innovative Food Ingredients Inc. Universal Corp. supplies tobacco and other agricultural products to more than 30 countries across North America, South America, Europe, Asia and Africa. For its fiscal year ending March 31, 2020, the company reported $1.9 billion in revenue.

“We’re excited to have reached this agreement with Silva as we continue to diversify our offerings and generate new opportunities for value creation,” Universal Chairman, President and CEO George C. Freeman III said in a statement. “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.”

Founded in 1979, Silva procures more than 60 types of dehydrated vegetables, fruits and herbs from more than 20 countries. Aside from sourcing, the company processes natural raw materials into custom dehydrated vegetable- and fruit-based ingredients for end products. The company employs more than 200 people and has a 380,000-square-foot manufacturing facility.

“For more than 40 years, Silva has consistently produced flavorful, high-quality, natural specialty ingredients to meet our customers’ specifications,” Silva majority owner and CEO Heinz-Peter Schmidt said in a statement. “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.”

Universal expects the transaction to close in October this year, according to a company statement. Following the close of the transaction, Silva President Kent DeVries will continue to run the business and report to Patrick O’Keefe, Universal Global Ventures senior vice president.

“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,” Freeman said in a statement. “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.”

Harris Williams acted as a financial adviser to Universal and Troutman Pepper Hamilton Sanders LLP acted as legal counsel. Houlihan Lokey acted as a financial adviser to Silva and Winston & Strawn LLP and Torsten Steinhaus, a senior partner of Steinhaus Prof. Dr. Griesar in Frankfurt, Germany, acted as legal counsel.

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