April 24, 2008
Planet Organic Health Corp. (TSX-V: POH) has signed a letter of intent to fully acquire Mrs. Green's Natural Market on April 30, 2007. The sale will more than double Planet Organic's revenue, which last year was $32.7 million. Mrs. Green's 2006 revenue was $38.1 million.
For Planet Organic, the purchase is more than a financial acquisition, but also the first part of a strategic initiative to move into the U.S. market.
"This is just the beginning of the journey," said Darren Krissie, vice president and CFO at Planet Organic. "It opens up doors for us to the U.S. market and brings the potential for continued expansion and new store acquisition."
Planet Organic currently runs eight natural food supermarkets across Canada as well as seven Healthy's stores and another 50 Sangster's Health Center stores. Planet Organic also owns Trophic Canada, Canada's leading manufacturer of natural supplements.
Mrs. Green's is a privately held retailer with 11 stores in Connecticut and New York. Mrs. Green's founders and owners Harold and June Hotchberger will remain onboard to support Planet Organic through the acquisition.
Planet Organic is no newcomer to acquisition and expansion. Founder Mark Craft started the company in Alberta in 1978 with just one store. By 1993, Craft and partners purchased High Level Natural Foods, renaming the store to Terra Natural Food Market, and then adding stores, changing the name to Planet Organic and expanding across Canada over the next several years. In 2004, Planet Organic acquired Great Ocean Natural Food Market in Nova Scotia, the chain of Sangster's Health Centers and Trophic Canada.
The Mrs. Green's acquisition marks Planet Organic's initial foray into U.S. markets with a vision for expansion into the smaller store marketplace.
"This is the start of our growth strategy in the United States," said Krissie. "We are focused on working with the smaller footprint store, meaning stores under 15,000 square feet and primarily under 10,000 square feet. At this size, we can go into new and smaller markets our larger competitors can't."
The purchase price for the sale is subject to closing adjustments relating to prepaid expenses and working capital as of April 30. Any upward adjustments to the purchase price resulting from working capital adjustments will be satisfied via the issuance of Planet Organic common shares at $2.50 per share. A portion of the purchase will be funded through the private placement of $6 million of Planet Organic shares at $2.50 per share available to institutional and accredited investors.
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