Northland Press Release:Northland Signs Agreement to Sell Domestic Private Label Juice Business to Cliffstar Corporation
WISCONSIN RAPIDS, Wis., Jan. 5 /PRNewswire/ -- Northland Cranberries, Inc. , manufacturer and marketer of Northland brand 100% juice cranberry blends and Seneca brand fruit juice products, today announced it has entered into an agreement to sell its private label shelf-stable juice business and certain related inventories to Cliffstar Corporation, a privately-held manufacturer of private label juice products based in Dunkirk, N.Y. No plants or equipment are included in the proposed sale, which is expected to close before the end of the first calendar quarter of 2000, after certain conditions, including expiration or earlier termination of the 30-day federal Hart-Scott-Rodino Act antitrust waiting period, are satisfied. The business being sold represents approximately $43 million of Northland's $237 million of fiscal 1999 revenues. Northland will receive a total of $32.35 million for the business and certain cranberry inventories and an additional amount equal to the fair market value of other inventories to be conveyed at closing, estimated to be approximately $4 million. Northland will receive Cliffstar's six-year promissory note for $28 million and the balance will be paid in cash at closing and during the first ten months thereafter. Northland will also be entitled to an earnout payment equal to a certain percentage of profits realized by Cliffstar from its sale of cranberry-based juice products during the six-year period following the closing, with a minimum earnout payment over the six years of $5 million. Cliffstar will have the option to terminate the earnout during the first 30 months following closing by paying Northland an aggregate earnout of $22 million (including any prior earnout payments) and prepaying the balance of the promissory note issued at closing. Northland expects to realize a pretax gain of approximately $3 million on the sale. At the closing, Northland and Cliffstar will enter into a long-term cranberry supply agreement pursuant to which Northland will supply cranberries to Cliffstar and a contract manufacturing agreement pursuant to which Northland will co-pack juice products for Cliffstar at its bottling facilities. John Swendrowski, Chairman and CEO of Northland, said, ``This sale will allow us to focus entirely on building the Northland and Seneca brands within the juice category. While the sale will considerably reduce annual revenues, we do not expect a material impact to our operating profits on an ongoing basis. We believe that the reduction in goodwill amortization and the interest income, co-packing profits and profits on raw cranberry sales from the transaction will offset prior profits from the business.''
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