Capmark Financial Group Inc. (OTCMKTS: CPMK) today announced it has entered into a definitive agreement to acquire Orchard Brands Corporation, a leading national, multi-brand family of 13 catalog and eCommerce brands serving the boomer and senior demographics, for $410 million in cash, subject to various pre- and post-closing adjustments.
The transaction will broaden and diversify the customer base and retail capabilities of Capmark’s wholly-owned subsidiary, Bluestem Brands, Inc.
Orchard Brands reported $1.02 billion in net sales for the period ended December 27, 2014 and adjusted EBITDA and Free Cash Flow (EBITDA less Capital Expenditures) of $70.7 million and $61.9 million, respectively. The acquisition will be funded with a combination of cash on-hand, a new term debt syndication, and a new asset-based lending facility. The term debt will be underwritten by Credit Suisse Securities (USA) LLC and Morgan Stanley Senior Funding Inc., while Credit Suisse and U.S. Bank National Association are leading the asset based lending facility.
"Orchard Brands is a great addition to our portfolio of retail brands and this transaction fits nicely into the theme of our long-term strategic plan. The Orchard family of brands provides us with the opportunity to serve a new customer base and deepen our private-label merchandise design and sourcing expertise," said Steve Nave, Capmark’s President and Chief Executive Officer. "We’re also excited to welcome Orchard Brands’ talented group of employees, who have done a remarkable job rebuilding their company, to the Capmark family."
“We’re excited to combine the Orchard family of brands with Bluestem," said Jim Fogarty, Chief Executive Officer of Orchard Brands. “Our team is looking forward to integrating our two firms’ unique capabilities to better serve our respective customers."
The Boards of Directors of both companies have approved the transaction, which is expected to close in the third quarter of 2015, subject to the satisfaction of customary closing conditions, including the compliance with the filing and waiting periods under the Hart-Scott-Rodino Act.
Capmark is being advised by its financial adviser Morgan Stanley & Co. LLC and by its counsels Akin Gump Strauss Hauer & Feld LLP and Faegre Baker Daniels LLP. Orchard Brands is being advised by its financial advisor Goldman Sachs and by its counsel Schulte Roth & Zabel.