Arkansas is gaining another public company with headquarters in state.
Privately held Westrock Coffee Co. announced Monday morning that it plans to trade its shares on the Nasdaq market after a transaction with another company closes in the third quarter.
Westrock is entering an agreement with Riverview Acquisition Corp., a publicly traded special purpose acquisition company in Memphis, that will result in Westrock Coffee becoming a public company.
The transaction estimates Westrock Coffee Co. at a pro forma enterprise value of about $1.086 billion at $10 per share.
Proceeds from the transaction will be used to fuel the company's growth plans, including further expansion of its products and customer base, as well as the build-out of manufacturing facilities in the U.S., including the nation's largest roasting to ready-to-drink facility in Conway.
Funds will also be used for strategic acquisitions and to accelerate growth in existing and international markets including Europe, Asia Pacific and the Middle East.
"We have a proven ability and long track record of executing and integrating accretive acquisitions," Westrock co-founder and Chief Executive Officer Scott Ford said on a conference call announcing the deal Monday morning. "We have a pipeline with more than 50 potential targets, with over $5 billion in annual revenues. Importantly, we expect to have a clean balance sheet and a liquid currency on the other side of closing the transaction with Riverview to enable this acquisition strategy."
Westrock said it expects to be profitable this year and for sales to increase more than 30% to about $960 million. Chief Financial Officer Chris Pledger said on the call that Westrock generated $698 million in net sales and $47 million in adjusted earnings before interest, taxes, depreciation, and amortization last year. In 2022, Westrock projects $960 million in net sales and $75 million in adjusted earnings before interest, taxes, depreciation and amortization.
The transaction will deliver about $500 million in gross cash proceeds to the combined company and Westrock Coffee's existing shareholders, none of whom are selling a share. Westrock shareholders will own about 53% of the shares of the combined company upon closing.
The deal also includes a committed $250 million common stock PIPE investment, at $10 per share, by the Riverview group. Westrock founders will commit an additional $25 million to the investment. A PIPE deal, known as private investment in public equity, calls on investors to make a specific investment or share purchase in a public company.
Brad Martin, chairman and chief executive officer of Riverview, said on Monday's call that the deal also received commitments of $78 million each from HF Capital, the Haslam Family Investment Office, and from funds managed by Southeastern Asset Management Company, also of Memphis. The Haslam family partly owns Pilot truck stops and also owns the Cleveland Browns of the National Football League.
Westrock Coffee has entered into a financing commitment from Wells Fargo Bank to provide a $300 million line of credit.
"This combination of the private investment we are making in the company, the new $300 million credit facility ... provides a very solid financial foundation to pursue the Westrock growth strategy," Martin said Monday.
Westrock Coffee supplies some of the world's most iconic brands with coffee, tea, flavors, extracts and ingredients products. Westrock Coffee's long-tenured customers include blue-chip market leaders across the retail, restaurant and food service, convenience store and travel center, noncommercial account, consumer packaging and hospitality industries.
In December, Westrock announced plans to double the size of its facilities in Central Arkansas as part of a more than $100 million investment in a multiyear project that also will increase production in North Carolina and Malaysia.
The company purchased a 524,000-square-foot plant in Conway that will be expanded over time and include about 250 employees, which would increase the company's Arkansas employee base to about 600.
Once fully operational, the coffee and tea producer will have about 920,000 square feet of office, manufacturing, warehousing and distribution space in North Little Rock and Conway. Company officials said the Conway plant will be the largest of its kind in the United States and will begin producing extracts, or concentrated liquids, in 2023.
CORRECTION: The enterprise value of Westrock Coffee Co. is reported by Westrock to be $1.08 billion. A previous version of this story incorrectly described the amount.