Green Mountain Coffee, Inc. (NASDAQ: GMCR) announced that effective yesterday it has acquired Frontier Organic Coffee(TM) from Frontier Natural Products Co-op of Norway, Iowa. Green Mountain Coffee purchased the Frontier Organic Coffee brand, its trade information, and various other assets related to its coffee business from Frontier Natural Products Co-op for approximately $2.7 million in cash, including estimated transaction costs. The Company financed the acquisition through its existing line of bank debt. Frontier is one of the largest importers and roasters dedicated to 100% certified organic coffee in North America. Offering both bulk and packaged coffee, Frontier Organic Coffee’s annual sales last year were over $3.5 million.
“Frontier Organic Coffee will be a great addition to the Green Mountain Coffee family,” said Robert P. Stiller, President and CEO of Green Mountain Coffee, Inc. “Frontier’s leadership in social responsibility and high-quality certified organic coffees will enhance our position in these areas of strategic importance to us. The acquisition of Frontier provides us with new opportunities to expand our presence in the rapidly growing natural foods market segment.”
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Robert D. Britt, Chief Financial Officer added: “The Frontier Organic Coffee acquisition is designed to be immediately accretive to earnings, although its impact is not expected to be material due to the size of the transaction. While we expect the effect on this fiscal year’s financial results to be essentially neutral, going forward it should enhance Green Mountain Coffee’s efforts to meet our goals for growing both our top line and, particularly in view of our ability to finance this deal at current variable interest rates of approximately 5%, our bottom line.”
A leader in the natural products and organic industries, Frontier is dedicated to organic agricultural research, including international, organic coffee-growing methods. Frontier’s research has been driven by its high quality standards as well as its commitment to bettering the human and natural environments in the agricultural regions around the world, not only for coffee, but also for herbs and spices, a portion of the business they are retaining.
For the past eight years, Frontier has contributed extensive time and resources to study organic coffee-growing methods in various regions and has, in turn, shared this knowledge with growers. By introducing organic coffee into certain coffee-growing areas, Frontier has been able to help create better livelihoods and environmental working conditions for many growers and their families.
“Frontier shares Green Mountain Coffee’s commitment to the environment and to the health and well-being of people in coffee-growing communities where we have done business,” stated Steve Hughes, CEO of Frontier Natural Products Co-op. “We are very pleased with the sale of our coffee business, which is the result of a strategic management decision here at Frontier to seek other growth opportunities by focusing on our core business. We are proud of the Frontier Organic Coffee legacy,” Hughes added, “and are fully confident that Green Mountain will carry similar programs forward under their own impressive social-responsibility initiatives.”
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By GlobalDataSteve Sabol, Vice President of Sales for Green Mountain Coffee, said: “With the acquisition of Frontier Organic Coffee, we look forward to further developing important partnerships already established by Frontier with natural food brokers, distributors, and retailers including United Natural Foods, Inc., Tree of Life, and Fred Meyer, among others.”
Frontier Natural Products Co-op, based in Boulder, Colorado, and Norway, Iowa, offers a full line of natural and organic products, including natural remedies, packaged culinary herbs and spices, bulk herbs and spices, and 100% pure-essential-oil aromatherapy products. Through a distribution agreement with Green Mountain Coffee, Inc., Frontier will continue to sell Frontier organic coffees and Green Mountain Coffee Roasters’ Fair Trade coffees to its customers. Frontier’s goal is to provide consumers with the highest quality organic and natural products, while supporting and promoting socially responsible business practices, organic agriculture and environmental activities. Frontier’s dedication to quality and organic agriculture is manifested through the company’s Organic Research Farm, Quality Assurance Lab, and the National Center for the Preservation of Medicinal Herbs. For more information, see the Frontier website at www.frontiercoop.com.
Green Mountain Coffee, Inc. is a leader in the specialty coffee industry and has been recognized by Forbes Magazine as one of the “200 Best Small Companies in America.” The company roasts high-quality Arabica coffees and offers over 60 varieties including single-origin, estate, certified organic, Fair Trade, signature blends, and flavored coffees that it sells under the Green Mountain Coffee Roasters® brand. The majority of Green Mountain Coffee’s revenue is derived from its wholesale operation that serves supermarkets, convenience stores, offices, and other locations where fine coffees are sold. Green Mountain Coffee also operates a direct mail business and an e-commerce website (www.GreenMountainCoffee.com) with secure on-line ordering for customers from its Waterbury, Vermont headquarters. The Company seeks to make the world a better place for present and future generations by operating in an environmentally and socially conscientious manner.
Certain statements contained herein are not based on historical fact and are “forward-looking statements” within the meaning of the applicable securities laws and regulations. Owing to the uncertainties inherent in forward-looking statements, actual results could differ materially from those set forth in forward-looking statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, fluctuations in availability and cost of green coffee, the impact of a weaker economy, competition and other business conditions in the coffee industry and more generally in the food and beverage industry, the impact of the loss of one or more major customers, delays in the timing of adding new locations with existing customers, the Company’s level of success in continuing to attract new customers, variances from budgeted sales mix and growth rate, weather and special or unusual events, as well as other risk factors as described more fully in the Company’s filings with the Securities and Exchange Commission.
