Westrock Coffee to “go public” in complex deal with Memphis-based investor
April 11-17, 2022
By Wesley Brown
Arkansas will add another company to its ranks of publicly traded companies after fast-growing Westrock Coffee Holdings LLC recently announced it would “go public” nearly 15 years after the Ford family sold off Central Arkansas’ largest Fortune 500 company.
On April 4, Westrock Coffee said it plans to go public via a business combination with Riverview Acquisition Corp. (RVAC), which values the Little Rock coffee producer at approximately $1.086 billion. The proposed business combination will allow Westrock Coffee to accelerate the build-out of the United States’ largest roasting to ready-to-drink facility, as well as the Company’s further expansion into Europe, Asia Pacific and the Middle East in support of its blue-chip customers.
Upon the closing of the transaction expected later this year, the combined company will be named Westrock Coffee Company and is expected to be listed on the Nasdaq under the ticker symbol “WEST.”
Westrock Coffee is led by CEO and Co-founder Scott Ford, previously president and CEO of Alltel Corp., which was the nation’s fourth largest wireless company before it was sold in early 2009. RVAC is led by its Company Chairman and CEO R. Brad Martin, retired chairman and CEO of Saks Incorporated and current Board member of FedEx Corporation and Pilot Company.
“The announcement … to go public via this transaction with Riverview represents a truly important milestone in Westrock Coffee’s journey,” said Ford. “We started Westrock Coffee when we saw the need for coffee farmers in Rwanda to earn a living wage and realized that a new business model for the industry could enable this outcome while being self-sustaining and unreliant on the vagaries of charity or consumer price premiums.”
“Our mission to positively impact the coffee, tea, flavors, extracts and ingredients market from crop to cup has proven to be both enormously successful and gratifying,” Ford continued. “Our scaled platform and comprehensive portfolio of beverage solutions has allowed us to deliver high-quality coffee, tea and extracts products to the largest and most recognizable names in the world, while making a noticeable impact in the lives of our farmer partners, by empowering them economically to improve their lives and the lives of those in their communities.”
Ford said as Westrock was considering entering the public market, company officials had the opportunity to meet Martin, whom he called “an accomplished executive whose big heart and experience with scaled operating platforms made him the ideal partner to help fulfill our global mission.”
“This transaction, in partnership with Brad and the incredible team at Riverview Acquisition Corp., will catapult our efforts globally and open a pathway for public investors to participate in our important work,” said the former Alltel CEO who is also a board director at AT&T Inc.
Blank check deal
In Wall Street circles, Memphis-based RVAC is known as a “blank check” company that was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses.
“When we launched Riverview Acquisition Corp., I stated that our objective was to find a merger partner in an attractive business with tangible growth prospects in which we could invest, a solid market position with competitive strengths, and an experienced, public company-ready management team that has demonstrated a commitment to maximizing value while operating with the highest level of integrity,” said Martin. “I’m pleased that we are able to announce … we have achieved that objective in our proposed merger with Westrock Coffee.”
“I’ve long admired the Ford family, and because of my respect for them, I approached them about the possibility of partnering with Riverview. The intense customer, commercial and mission focus of the Westrock team has built a terrific business over the last 13 years, and now the Company is poised for a very promising future,” said Martin. “The Westrock management team will be the largest equity owners in our Company, and my fellow shareholders in Riverview Acquisition Corp. and my partners in the PIPE investment are delighted to become part of the Westrock family.”
As noted, the proposed Westrock-RVAC deal values the combined company at a pro forma enterprise value of approximately $1.086 billion at $10 per share, representing 1.1 times projected 2022 revenues and approximately 14.5 times projected 2022 adjusted earnings before interest.
As part of the transaction, Westrock Coffee will convert into a corporation and all its existing shareholders will roll 100% of their shares into the new company. At the close of the deal, assuming no redemptions from RVAC shareholders, Westrock shareholders will own approximately 53% of the shares of the combined company on closing.
Assuming no redemptions from RVAC shareholders, the transaction will deliver approximately $500 million in gross cash proceeds to the combined company including $250 million in public equities financing at $10 per share, funded by $60 million from Martin, NFC Investments, LLC and the other RVAC founders. The remaining funding will include $25 million from Westrock Coffee founders, and $78 million each from HF Capital, the Haslam family investment office and funds managed by Southeastern Asset Management, a privately held investment firm led by Memphis billionaire Mason Hawking.
In connection with the transactions, Westrock Coffee has also secured a financing commitment from Wells Fargo for a $300 million Senior Secured Pro Rata Credit Facility to be entered into at closing, which will be used to refinance the company’s existing debt and fund its expansion plans.
The board of directors of Westrock Coffee and RVAC have each unanimously approved this transaction. The transaction is subject to customary closing conditions, including approval of the shareholders of RVAC. The transaction is expected to close by the end of the third quarter of 2022.
Alltel roots
The complex financing arrangement to take Westrock public comes nearly four months after the privately held Little Rock coffee manufacturer unveiled broad expansion plans on Dec. 16 to make the former Arkansas coffee startup one of the leading global coffee producers.
The new plans included revamping an empty Conway factory into a state-of-the-art factory that will add 250 high-paying new jobs to local payrolls and churn out new coffee, tea and associated products. Westrock said the new year plans will expand its operations and beverage capabilities with the purchase of a new 524,000 square-foot facility in Conway that will be the largest such manufacturing site of its kind in the U.S.
Also, just over two years ago Westrock trumpeted a $405 million deal to buy North Carolina-based S&D Coffee & Tea from publicly traded Cott Corp. At the time, Ford said the company will also expand its extracts manufacturing capacity in Concord, N.C., and launch new operations in Malaysia that will serve its rapidly growing customer demand across the Asia-Pacific (APAC) and Middle East and North Africa (MENA) regions.
The privately held coffee manufacturer and producer was first founded in 2009 by the former Alltel CEO and his father Joe Scott Ford and several other investors, including The Stephens Group of Little Rock.
The Fords held the same roles at the former Alltel Corp in November 2007 when the former Little Rock wireless giant was sold to TPG Capital and GS Capital Partners for $25 billion. In June 2008, Verizon Wireless announced it would acquire most of Alltel Wireless from the Wall Street private equity firms in a deal valued at $28.1 billion.
Little Rock real estate investment trust Uniti Group and privately held Windstream Corp. are also offshoots of Alltel Corp., formerly the nation’s third largest wireless company. Alltel split off from Windstream into a separate publicly traded company in 2006 ahead of its deals with TPG Capital and Verizon. Windstream later split off from Uniti into a real estate investment trust in 2015 but later had to file for bankruptcy protection after losing a lawsuit against a Wall Street venture fund concerning Uniti debt.
Ironically, the Wall Street Journal reported in October that New York City-based Zayo Group was seeking to buy Uniti Group and its largest customer, Windstream, and put them back together. There have been no further reports on a possible deal.
Photo Caption:
Fast-growing Westrock Coffee would soon trade on the Nasdaq under the “WEST” stock symbol. Blank check deal with Memphis-based Riverview Acquisition Corp. values the Little Rock coffee producer and distributor at $1.086 billion, or $10 a share.
