Landec Corporation (“Landec” or the “Company”), a diversified health and wellness company focused on its growing Lifecore Biomedical (“Lifecore”) business – a fully integrated contract development and manufacturing organization (“CDMO”) that offers highly differentiated capabilities in the development, fill and finish of complex sterile injectable pharmaceutical products in syringes and vials – announced that it has completed the sale of its Curation Food’s fresh packaged salads and vegetables business for $73.5 million in cash to Taylor Farms Retail, Inc. (“Taylor Farms”). Net proceeds from the transaction will be used to repay borrowings under the Company’s credit facility, which the Company believes will drive significant deleveraging and strengthen the Company’s financial position, allowing management to devote even greater resources and investment to Lifecore.
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Dr. Albert Bolles, Chief Executive Officer of Landec Corporation, said, “Closing on this transaction today marks an important milestone in Project SWIFT – the Company’s framework for enhancing the value and performance of the Curation Foods business – and demonstrates ongoing efforts to extract value from our non-core assets and re-orient the Company around our rapidly growing Lifecore Biomedical business. We will be deploying the net proceeds from the sale directly toward debt paydown, which will reduce our balance sheet leverage and allow us to channel our resources to more fully support the growth and expansion of the Lifecore Biomedical business. While there’s more work to do, the Company is laser-focused on the business and assets that are growing at a greater rate, produce more attractive margins, and have value that is presently underappreciated. Going forward, we will maintain our continued commitment to maximize the value of our Lifecore and remaining Curation Foods businesses. We are excited about the path ahead.”
Transaction Highlights
The transaction included the sale of all of the assets exclusively associated with Curation Foods’ core fresh vegetable bag, tray, and salad businesses, including its flagship brand Eat Smart®, representing revenue of approximately $366 million in the trailing twelve month period ended August 29, 2021. The transaction does not include the Company’s avocado products or technology businesses (Yucatan Foods, O Olive Oil & Vinegar®, and patented BreatheWay® packaging technology), which the Company has retained. The Company also has agreed to provide certain customary transition services to Taylor Farms related to the Business for up to six months, in exchange for a monthly fee.
John D. Morberg, Chief Financial Officer of Landec Corporation, stated, “We are pleased to complete this sale and simultaneously pay down debt by $67.9 million, net, after deducting for total transaction related costs and debt prepayment fees. This is a major step in simplifying the business and has an immediate effect of reducing our leverage ratio, which we believe will provide Landec with greater financial flexibility to achieve our long-term growth and value objectives at Lifecore.”
Curation Foods’ results of operations related to the assets sold will be reported as discontinued operations beginning in the fiscal third quarter of 2022.
William Blair & Company, L.L.C. served as financial advisor and Latham & Watkins LLP served as legal advisor to Landec.
Fiscal Second Quarter Conference Call
Landec Corporation will host a conference call to discuss fiscal 2022 second quarter financial results and implications of the transaction on January 5, 2022, including updated guidance for the go-forward business. The live webcast can be accessed via Landec’s website on the Investor Events & Presentations page. The webcast will be available for 30 days.
Date: Wednesday, January 5, 2022
Time: 2:00 p.m. Pacific time (5:00 p.m. Eastern time)
Direct Webcast link: http://ir.Landec.com/events.cfm
To participate in the conference call via telephone, dial toll-free: 1-877-407-3982 (U.S.) or 1-201-493-6780 (International). Please call the conference telephone number 5-10 minutes prior to the start time so the operator can register your name and organization. If you have any difficulty with the webcast or connecting to the call, please contact ICR at (646) 277-1263.
A replay of the call will be available through Wednesday, January 12, by calling toll-free: 1-844-512-2921 (U.S.)or 1-412-317-6671 (International), and entering code13725662.
About Landec Corporation
Landec Corporation is a leading innovator of diversified health and wellness solutions with two operating businesses: Lifecore Biomedical, Inc. and Curation Foods, Inc. Landec designs, develops, manufactures and sells products for the biopharmaceutical and food industries. Lifecore Biomedical is a fully integrated contract development and manufacturing organization (CDMO) that offers highly differentiated capabilities in the development, fill and finish of complex sterile injectable pharmaceutical products in syringes and vials. As a leading manufacturer of premium, injectable grade Hyaluronic Acid, Lifecore brings 35 years of expertise as a partner for global and emerging biopharmaceutical and biotechnology companies across multiple therapeutic categories to bring their innovations to market. Curation Foods is focused on innovating and distributing plant-based foods with 100% clean ingredients to retail, club and foodservice channels throughout North America. Curation Foods brands include Yucatan® and Cabo Fresh® avocado products and O Olive Oil & Vinegar® premium artisan products