Healthy food and beverages provider SunOpta Inc. has acquired plant-based beverage brands Dream and WestSoy from The Hain Celestial Group. The total consideration for the acquisitions is $33 million and is to be funded primarily with a $20 million FILO term loan.
SunOpta (STKL) Chief Executive Officer Joe Ennen said, “This transaction is very consistent with our previously stated objective of pursuing strong organic and inorganic growth in our plant-based business.”
Ennen added, “These two brands are perfect examples of niche brands that complement but do not directly compete with, our vitally important co-manufactured partners. Since SunOpta has been manufacturing these brands for years, when this opportunity presented itself it was an obvious fit for us to own these brands.” (See SunOpta stock analysis on TipRanks)
These two brands add to the company’s Plant-Based Foods and beverages segment. The Dream brand offers shelf-stable, plant-based milks and has a wide distribution across natural, organic, and grocery channels. At present, SunOpta produces 50% of the brand’s product portfolio.
The WestSoy brand has a USDA organic certification together with the American Heart Association certification for a heart-healthy product. SunOpta produces the complete product portfolio of WestSoy.
On April 13, Canaccord Genuity analyst Robert Burleson initiated coverage on the stock with a Buy rating and a $20 price target (35.4% upside potential).
Burleson commented, “Changes in management, disposition of non-core assets, and investments in capacity and innovation have positioned STKL for strong revenue growth and improving profit margins.”
Consensus among analysts is that SunOpta is a Strong Buy based on 3 unanimous Buys. The average analyst price target of $21 implies upside potential of 42.2%.
Shares have surged about 612.4% over the past year.
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