Lamb Weston Holdings, Inc. (NYSE: LW) (“Lamb Weston” or the
“Company”) announced today it has entered into an agreement (the
“Purchase Agreement”) to purchase the remaining equity interests in
its European joint venture with Meijer Frozen Foods B.V. for €700
million in cash and common stock of Lamb Weston.
“Lamb-Weston/Meijer was built over the last 28 years, and we’re
grateful to Meijer Frozen Foods for their longstanding
partnership,” said Tom Werner, President and CEO of Lamb Weston.
“The joint venture has served as a strong platform to drive growth
in Europe and the Middle East, as well as to support our global
customer base across our key international markets. This
transaction firmly aligns with Lamb Weston’s long-term capital
allocation and acquisition framework, and we believe it will
strengthen our manufacturing footprint by leveraging a truly global
supply chain to better serve our customers and position us to take
advantage of growth opportunities in Europe, the Middle East and
Africa.”
“We’re proud of the business we’ve built together to create a
market leader in Europe,” said Kees Meijer, CEO of Meijer Frozen
Foods. “We remain confident in the long-term outlook for Lamb
Weston and the global frozen potato category. By holding an
investment in common stock of Lamb Weston after the transaction
closes, we sustain our strong belief in a bright future for the
business.”
Upon completion of the transaction, Lamb Weston will own 100% of
Lamb-Weston/Meijer v.o.f. (“Lamb-Weston/Meijer”), formerly operated
as a 50/50 joint venture between a wholly-owned subsidiary of Lamb
Weston and Meijer Frozen Foods. Lamb Weston will pay transaction
consideration of €700 million, comprised of €525 million in cash
and €175 million of Lamb Weston’s common stock. The Company
anticipates closing the transaction in the second half of fiscal
2023, subject to regulatory approvals. The Company expects to fund
the cash portion of the acquisition with new borrowings and cash on
hand. Lamb Weston’s targeted long-term net leverage range1 of 3.5x
to 4.0x remains unchanged.
Lamb-Weston/Meijer is one of the leading suppliers of frozen
potato products in Europe, the Middle East and Africa, with
approximately €954 million in net sales in fiscal 2022 (including
€114 million of net sales from its former joint venture in Russia).
The transaction will give the Company ownership of an additional
five manufacturing facilities worldwide, including four facilities
in the Netherlands and one in the United Kingdom, as well as a
sixth manufacturing facility through a 75% interest in a joint
venture in Austria. These facilities produce nearly two billion
pounds (910,000 MT) of finished frozen products annually. In
addition, upon completion of the transaction, the former joint
venture’s approximately 1,500 employees will become employees of
Lamb Weston.
As a 50% owner of Lamb-Weston/Meijer, the Company recorded its
50% portion of earnings in Equity Method Investment Earnings in its
financial statements. As of the transaction closing,
Lamb-Weston/Meijer will be a wholly-owned subsidiary of the
Company, and the Company will fully consolidate
Lamb-Weston/Meijer’s results in its financial statements.
Goldman Sachs is acting as financial advisor to Lamb Weston in
connection with this transaction.
Webcast and Conference Call
Information
Lamb Weston will hold a conference call to review the proposed
transaction at 10:00 a.m. EDT today, October 20, 2022. Participants
in the U.S. and Canada may access the conference call by dialing
888-204-4368 and participants outside the U.S. and Canada should
dial +1-323-994-2082. The confirmation code is 8173889. The
conference call and presentation also may be accessed live on the
internet. Participants can register for the event at:
https://globalmeet.webcasts.com/starthere.jsp?ei=1578075&tp_key=f810adb575.
A rebroadcast of the conference call will be available beginning
on Friday, October 21, 2022 after 2:00 p.m. ET at
https://investors.lambweston.com/events-and-presentations.
About Lamb Weston
Lamb Weston is a leading supplier of frozen potato, sweet
potato, appetizer and vegetable products to restaurants and
retailers around the world. For more than 70 years, Lamb Weston has
led the industry in innovation, introducing inventive products that
simplify back-of-house management for its customers and make things
more delicious for their customers. From the fields where Lamb
Weston potatoes are grown to proactive customer partnerships, Lamb
Weston always strives for more and never settles. Because, when we
look at a potato, we see possibilities. Learn more about us at
lambweston.com.
Forward-Looking
Statements
This press release contains forward-looking statements within
the meaning of the federal securities laws. Words such as
“believe,” “will,” “anticipate,” “expect,” “create,” and variations
of such words and similar expressions are intended to identify
forward-looking statements. Examples of forward-looking statements
include, but are not limited to, statements regarding the Company’s
acquisition of Lamb-Weston/Meijer v.o.f., including the anticipated
benefits of the transaction, the expected timing of the completion
of the transaction, related financing and the ability of the
parties to complete the transaction, as well as statements
regarding the Company’s business outlook and prospects. These
forward-looking statements are based on management’s current
expectations and are subject to uncertainties and changes in
circumstances. Readers of this press release should understand that
these statements are not guarantees of performance or results. Many
factors could affect these forward-looking statements and the
Company’s actual financial results and cause them to vary
materially from the expectations contained in the forward-looking
statements, including those set forth in this press release. These
risks and uncertainties include, among other things: the occurrence
of any event, change or other circumstances that could give rise to
the termination of the Company’s agreement to acquire the remaining
equity interests in the Lamb-Weston/Meijer joint venture; the risk
that the necessary regulatory approvals for the transaction may not
be obtained or may be obtained subject to conditions that are not
anticipated; the risk that the transaction will not be consummated
in a timely manner or at all; risks that any of the closing
conditions to the transaction may not be satisfied or may not be
satisfied in a timely manner; risks related to disruption of
management time from ongoing business operations due to the
transaction; failure to realize the benefits expected from the
transaction; and the effect of the announcement of the transaction
on the Company’s ability to retain customers and retain and hire
key personnel, maintain relationships with suppliers and on its
operating results and businesses generally; the availability and
prices of raw materials; labor shortages and other operational
challenges; disruptions in the global economy caused by the war in
Ukraine and the possible related heightening of the Company’s other
known risks; impacts on the Company’s business due to health
pandemics or other contagious outbreaks, such as the COVID-19
pandemic, including impacts on demand for its products, increased
costs, disruption of supply, other constraints in the availability
of key commodities and other necessary services or restrictions
imposed by public health authorities or governments; levels of
pension, labor and people-related expenses; the Company’s ability
to successfully execute its long-term value creation strategies;
the Company’s ability to execute on large capital projects,
including construction of new production lines or facilities; the
competitive environment and related conditions in the markets in
which the Company and its joint ventures operate; political and
economic conditions of the countries in which the Company and its
joint ventures conduct business and other factors related to its
international operations; disruption of the Company’s access to
export mechanisms; risks associated with possible acquisitions,
including the Company’s ability to complete acquisitions or
integrate acquired businesses; its debt levels; changes in the
Company’s relationships with its growers or significant customers;
the success of the Company’s joint ventures; actions of governments
and regulatory factors affecting the Company’s businesses or joint
ventures; the ultimate outcome of litigation or any product
recalls; the Company’s ability to pay regular quarterly cash
dividends and the amounts and timing of any future dividends; and
other risks described in the Company’s reports filed from time to
time with the Securities and Exchange Commission. The Company
cautions readers not to place undue reliance on any forward-looking
statements included in this press release, which speak only as of
the date of this press release. The Company undertakes no
responsibility for updating these statements, except as required by
law.
_________________________________
1The Company defines net leverage as the ratio of net debt to
Adjusted EBITDA including unconsolidated joint ventures. Net debt,
Adjusted EBITDA including unconsolidated joint ventures and the
related net leverage ratio are non-GAAP financial measures. Please
see the discussion of non-GAAP financial measures and the
associated reconciliations of historical non-GAAP financial
measures included in the investor presentation furnished with the
Company’s Current Report on Form 8-K on October 20, 2022 for more
information. In addition, forward-looking non-GAAP measures related
to the Company’s acquisition of Lamb-Weston/Meijer, including net
leverage ratio, are unable to be reconciled to relevant GAAP
measures without unreasonable efforts because of items that may
impact comparability, which may include, but are not limited to,
items such as purchase accounting adjustments, integration costs,
and the impact of commodity derivatives.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221020005239/en/
Investor Relations: Dexter Congbalay 224-306-1535
Dexter.Congbalay@lambweston.com
Media: Shelby Stoolman 208-424-5461
shelby.stoolman@lambweston.com
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