Chefs' Warehouse announced that it has entered into a definitive agreement to acquire substantially all of the assets and certain equity interests of Del Monte Capitol Meat Co. and its affiliated companies for approximately $191.2 million including cash, stock and notes.

Founded in 1926, Del Monte supplies high quality, USDA inspected beef, pork, lamb, veal, poultry and seafood products to Northern California. In addition, Del Monte's staff of highly skilled butchers are able to provide fresh, portion-controlled products to satisfy all of their customer's needs on a fresh, cut-to-order basis. John DeBenedetti, the CEO and principal owner of Del Monte, will be joining the company as Executive Vice President - Protein. He will also be joining the company's Board of Directors post-closing.

"We are thrilled to welcome John and the Del Monte family to Chefs' Warehouse," said Chris Pappas, chairman and chief executive officer of The Chefs' Warehouse, Inc. "Del Monte is a chef driven, specialty protein company that believes in a high-quality, high-service model; very much like The Chefs' Warehouse. Del Monte's diverse customer base and extensive, experienced sales force, along with their management's protein expertise, is a perfect fit and complement to our entire organization as we expect them to strengthen and expand our center of the plate offerings."

"On behalf of everyone at Del Monte, I would like to say that we are excited to join The Chefs' Warehouse team," said John DeBenedetti, president and chief executive officer of Del Monte. "We believe that joining The Chefs' Warehouse team will not only benefit our customers by substantially expanding the products we can offer them, but it will also create more opportunities for our employees as we grow together. I am also very excited to lead the Chefs' protein division and believe there is significant opportunity to add value as we build this best in class category."

Del Monte is expected to generate approximately $200.0 million to $225.0 million in annualized net sales in 2015. The purchase price for the business is expected to be approximately $191.2 million (subject to customary working capital adjustments as well as final audited results of the acquired entities), consisting of the following:

• $127.5 million in cash, which will be funded from cash on hand and additional borrowings under the Company's existing credit arrangements
• 1.2 million shares of the Company's common stock (valued at $22.00 per share)
• $38.3 million in convertible subordinated notes with a six-year maturity bearing interest at 2.5% with a conversion price of $29.70 per share.

In addition, the company will pay additional contingent consideration which is expected to total approximately $25.5 million (subject to certain conditions and upon the successful achievement of Adjusted EBITDA targets over the six years following the closing of the acquisition).

On a preliminary basis, the company expects its full year 2015 results, including the transaction, to be in the following ranges:

• Net sales between $1.0 billion and $1.1 billion
• Adjusted EBITDA between $68.3 million and $72.0 million
• Net income per diluted share between $0.57 and $0.66
• Modified pro forma net income per diluted share between $0.70 and $0.80

This guidance is based on an effective tax rate of approximately 41.0% and fully diluted shares of approximately 28.0 million shares. The foregoing guidance is exclusive of transaction related charges including purchase accounting adjustments. The reconciliation of estimated adjusted diluted earnings per share to estimated diluted earnings per share is attached to this press release.

The transaction is subject to regulatory approvals, including expiration of the Hart-Scott-Rodino Antitrust waiting period and satisfaction of other customary closing conditions. The transaction is expected to close near the end of the first quarter of 2015.

Source: Chef’ Warehouse