Universal Corp. (UVV) to Acquire FruitSmart

Universal Corporation (NYSE: UVV) today announced that it has entered into a definitive agreement to acquire FruitSmart, an independent specialty fruit and vegetable ingredient processor serving global markets.

Founded in 1982, FruitSmart supplies a broad set of juices, concentrates, blends, purees, fibers, seed and seed powders, and other value-added products to food, beverage and flavor companies throughout the United States and internationally through value-added processing of various fruit and vegetable products. FruitSmart processes apples, grapes, blueberries, raspberries, cherries, blackberries, pears, cranberries and strawberries as well as other fruits and vegetables. The business is headquartered in the Yakima Valley of the state of Washington, where it has approximately 200 employees and two manufacturing facilities.

"Since outlining our capital allocation strategy in May 2018, we have been identifying a pipeline of strategic opportunities in adjacent markets around our core strengths: leveraging our highly localized rural infrastructure to source and process high-value, non-commodity, semi-perishable varietals from a large, reliant grower base for customers who demand fully traceable and compliant inputs," said George C. Freeman, III, Chairman, President and Chief Executive Officer of Universal Corporation.

"Given the worldwide addressable market opportunity for fruit and vegetable sourcing and processing, and the similar supplier dynamics and scale benefits to our existing business, this transaction represents a foundational step in building out a broader agri-products services platform and has the potential to be a new source of growth to drive future value creation for our shareholders," Mr. Freeman continued. "With a healthy balance sheet and a demonstrated ability to generate free cash flow, Universal Corporation will continue to explore additional growth opportunities in plant-based ingredients processing and other attractive adjacencies, while maintaining our commitment to our investment grade credit rating and to increasing our quarterly dividend on an annual basis, as we have done for 49 consecutive years."

Mr. Freeman concluded, "FruitSmart is a market leader for reliability of supply, high-quality products and customized solutions. We are excited to work with the talented and highly regarded FruitSmart management team to build on this strong foundation and FruitSmart's demonstrated ability to achieve profitable growth."

Universal Corporation expects the transaction to close in the current fiscal year, subject to customary closing conditions. Following the close of the transaction, Terry Chambers, President of FruitSmart, will continue to lead the FruitSmart business as President.

"By joining Universal Corporation, FruitSmart and our employees will benefit from Universal's global agri-products services and supply chain management expertise, as well as the greater resources and enhanced scale of a larger, public company. Importantly, we will maintain our continued commitment to outstanding product quality and our strong relationships with our growers and our customers," said Terry Chambers, President of FruitSmart.

FruitSmart is well-positioned to capitalize on recent shifts in market dynamics and consumer behavior including a secular shift towards health and wellness, favoring natural clean-label ingredient producers and the rise of fruit as a natural clean-label sweetener alternative to processed sugar. FruitSmart also stands to benefit from growing consumer interest in better-for-you premium ingredients, including custom blends, not-from-concentrate and dry products, and strong growth in targeted end markets utilizing FruitSmart products, including ciders, purees and nutraceuticals.

Universal Corporation anticipates this acquisition will be accretive to earnings the first fiscal year following closing. As previously outlined, Universal Corporation believes businesses in adjacent industries could represent at least 10 to 20 percent of earnings in the next five years.

Universal Corporation expects to fund the transaction with a combination of cash on hand and existing borrowing capacity.

Advisors J.P. Morgan acted as exclusive financial advisor to Universal Corporation, and Troutman Sanders LLP acted as legal counsel. Cascadia Capital acted as exclusive financial advisor to FruitSmart, and Davis Wright Tremaine LLP acted as legal counsel.

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