Olam Food Ingredients Buying Spice Maker Olde Thompson for $950M

Olde Thompson makes spices, seasonings, baking ingredients and housewares from its two facilities in New Jersey and and California.

Olde Thompson

SINGAPORE — Olam Food Ingredients (OFI) is acquiring a leading US private-label spices and seasonings manufacturer, Olde Thompson, at an enterprise value of $950 million through its wholly-owned subsidiary Olam Holdings Inc.

This acquisition reinforces OFI’s growth strategy of being a global leader in providing sustainable, natural, value-added food and beverage ingredients and solutions so that consumers can enjoy the healthy and tasty products that they love.   

Image ServiceThis acquisition will be transformative for OFI’s spices business, which is an attractive and growing part of OFI’s overall portfolio. It will also create a substantive growth platform for OFI to provide similar sustainable and innovative retail solutions across OFI’s other products.

OFI CEO A. Shekhar said: “This transaction builds on our long 15-year partnership with Olde Thompson and is a logical move to combine our ‘back-end’ strengths in global origination and sustainable supply chains, with Olde Thompson’s ‘front-end’ capabilities in providing retail spice solutions to many major US retailers.“Growing our offerings of private label solutions is right at the heart of OFI’s strategy – and within that spices is one of the most attractive and growing categories, especially in the US. This will enable us to offer consumers a comprehensive range of bold, authentic, natural taste and flavors with end-to-end traceability.”

Established in 1944, Olde Thompson is a leading manufacturer of private label spices, seasonings, baking ingredients and spice-related housewares in the US. It has led and benefited from the increased penetration of private label in the spices and seasonings space, as well as the growing demand for healthy, natural, organic, clean-label spices and ethnic, savory flavors. With two highly automated bi-coastal facilities in Bayonne, New Jersey and Oxnard, California, Olde Thompson has built a significant formulation, blending, packaging and distribution capacity to serve customers across the US. It has also built long-term relationships with a diverse group of blue-chip retail customers across the club, mass, grocery, discount and dollar store channels.

CEO of Olde Thompson David Sugarman said: “The acquisition of Olde Thompson by OFI is a terrific outcome for all of our key stakeholders. For our customers, this partnership pushes Olde Thompson to the forefront of sustainable innovation as it provides access to OFI’s extraordinary international sourcing capabilities and spice expertise that will allow us to provide a new level of traceability and transparency to the marketplace. Our employees will benefit from additional resources and opportunities that will accelerate our growth and their careers even further.”

Greg Estep, CEO of OFI’s spices business said: “Our global origination and sustainable spice supply chain along with Olde Thompson’s expertise in private label is going to be truly complementary and transformative for our spices business. We can now deliver greater value to our customers by combining Olde Thompson’s reach and capabilities in blending, product formulation and packaging to our seed and field management programs, ingredient processing capabilities and the differentiated transparency and traceability that our AtSource platform delivers.“I am very pleased that Olde Thompson’s senior executive leadership will continue at the helm, supported by dedicated teams who are domain experts in the retail space and committed to operational excellence and customer service. I am hugely excited with the prospects of integrating the two organizations which will open many new avenues of growth for the combined business and all the employees as well.”

Key financial information relating to the acquisition

Olam Holdings Inc. will acquire Olde Thompson from Kainos Capital and Olde Thompson’s management shareholders at an EV of $950 million, subject to net working capital adjustment at closing. The consideration was arrived at on a willing-buyer, willing-seller basis and implies an EV/EBITDA multiple of approximately 11.5 times, or approximately 8.5 times including expected synergies.

The acquisition of Olde Thompson is expected to be earnings and margin accretive to OFI from the first year onwards and generate potential EBITDA synergies of $25-30 million.

Subject to customary closing conditions, the transaction is expected to close in Q2 2021.

Olam is a food and agri-business supplying food, ingredients, feed and fibre to 17,300 customers worldwide. Olam's value chain spans over 60 countries and includes farming, processing and distribution operations, as well as a sourcing network of an estimated 5 million farmers.

More in Capital Investment