E.F. Hutton makes unsolicited bid to acquire Laird Superfoods

 

Last updated 8/18/2022 at Noon



Laird Superfood, the U.S.-based protein bars and plant-based creamers maker headquartered on Lundgren Mill Drive in Sisters has received a takeover offer from investment bank EF Hutton.

Laird, listed on the NYSE-American as LSF, which last week announced a first-half net loss of $19 million, said the approach has been made via a special purpose vehicle of EF Hutton for $3 a share, in what it called an “unsolicited offer.”

“The Laird Superfood board of directors will carefully review the proposal and determine the course of action that it believes is in the best interests of the company and all Laird Superfood shareholders,” the business said in a brief statement August 17.

Founded in 2015 by renowned surfer Laird Hamilton, the company added Picky Bars of Bend to its portfolio last year through an acquisition valued at $12m. Picky Bars makes protein bars, granola and oatmeal, and also the Drizzle brand of nut butters, mainly sold directly to consumers.

Other areas of Laird’s range, marketed online and through retail and foodservice, include plant-based creamers such as oat and coconut, coconut waters and mushroom protein powders. The company had its first ever quarterly sales decline in the most recent quarter.

The first-half loss to June 30 was based on sales of $18 million, a 9.9 percent improvement from a year earlier, which the company said reflected online growth and the Picky Bars transaction. However, the net loss widened from $11.6 million. Laird also reported an operating loss of $18.9 million, compared to a $11.6 million loss in the corresponding period.

In its results commentary, the company said: “We are operating in an unusually uncertain economic environment with the highest inflation rates in decades, particularly in food and fuel, which has created more pressure on margin mix and operating costs than we had anticipated in the beginning of the year.”

The stock jumped on the news from $2.25/share to $2.85 but pulled back to $2.60. A year ago it was trading at $19.95 and at its peak shares sold for $57.10. That the shares did not rise to the $3 offer price suggests that the market does not expect the deal to close at the $3 price.

Laird, at $3 per share, is considered a good deal for any buyer as the $28 million offer would gain them the $24-plus million cash on hand Laird had at the end of June. In other words the buyer would basically be buying the company with its own money, something the financial chat rooms don’t see happening.

Major institutional investors are included among its shareholders including some of the most recognizable names in the investment world. Laird has 139 institutional owners and shareholders that have filed 13D/G or 13F forms with the Securities Exchange Commission (SEC). These institutions hold a total of 2,199,191 shares, 24 percent of the total outstanding. Largest shareholders include names like Fidelity, Vanguard, Putnam, Prescott and BlackRock.

Individually, Thomas Wetherald who until December was Laird’s Board Chair, is the second-largest shareholder with an eight percent stake. Laird Hamilton owns 774,984 shares, 8.5 percent of the total.

In the last six months, the company has replaced its CEO, CFO, COO and Board Chair.

On May 30, 2017, the company entered into a forgivable loan agreement with the City of Sisters in the amount of $51,000. This forgivable loan was issued to help the company expand its business operations in the city through eligible jobs.

The company had until May 30, 2020 to create jobs for 30 full-time employees with an average annual salary of $40,000 per person, and, once created and filled, the company was required to maintain those jobs for an additional period of three years for the loan to be converted to a grant. The company created the eligible jobs as of April 1, 2018, and the loan was converted to a grant effective December 8, 2021.

Much of the “chatter” on various online finance forums regarding Laird evolves around the rate of cash burn, roughly $3.5 million per quarter and the cost of Laird operating as a public company. Almost 9 percent of its sales so far in 2022 have been consumed by professional fees — the monies paid to lawyers, accountants and compliance consultants.

Some of that money was a result of the separation from the company by its top executives.

Laird is obligated with substantial leases on its Lundgren Mill campus. The leases, valued at around $5 million run until 2029. The most recent addition to the campus of a 20,000 square foot production facility is highly technical and built around food processing. It is more valuable than as ordinary warehouse space.

In previous statements to The Nugget Laird has expressed its commitment to remaining in Sisters. It is not clear from the Hutton offer how or if the business might be repostured geographically. Laird’s margin is impacted with sales to the populated eastern seaboard especially with higher fuel costs.

Of some controversy in 2017 and 2018 was the fear by some Sisters residents that Laird’s ambitious goals of 500 employees would negatively impact traffic and its small town feel. Laird has reduced its workforce and it is now estimated at 75-82, down from approximately 150 in January.

 

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