Mama’s Creations, Inc. recently acquired Crown 1 Enterprises Inc., a full-service manufacturer of value-added proteins and ready-to-eat meals and a subsidiary of Sysco Corporation.

Crown brings approximately $56 million in annual revenue to Mama’s Creations, based on results for the fiscal year that ended on June 28, increasing the company’s sales base by nearly 40% and broadening its customer reach into new accounts. It primarily serves “hard to break into” retail partners who are not current Mama’s customers – complementing the company’s existing roster and opening channels for potential growth.

The acquisition also adds capabilities, such as a recently upgraded and expanded 42,000-sq.-ft., USDA-certified production facility in Bay Shore, N.Y. – complete with incremental grill capacity on equipment that Mama’s already runs – along with approximately 200 employees, which will expand the company’s production capacity and create “bench strength” for management. Proximity to the company’s Farmingdale, N.Y., location, which is about 10 miles away, provides production and warehousing efficiency, in addition to management synergies.

While expected to be accretive, the acquisition’s core rationale is to build capabilities: new capacity on familiar equipment, access to customers and aligned “Grandma Quality” standards. Bringing Crown into the Mama’s family will allow best-practice sharing, scale efficiencies and opportunities to enhance operational and SG&A execution – which should allow Mama’s to deliver better service for customers, tastier products for consumers and improved financial performance.

In addition to potential cost savings, the deal is expected to unlock revenue opportunities through cross-selling. Mama’s Creations plans to cross-sell its product lines to Crown’s customers (and vice versa) to drive incremental sales and increase its Average Items Carried across a broader retail footprint. Overall, this combination bolsters the company’s position as a one-stop-shop deli solutions platform with robust poultry, beef and prepared foods production footprints and accelerates progress toward its goal of reaching $1 billion in annual revenue by 2030.

Transaction Consideration

Mama’s Creations will acquire Crown for $17.5 million in cash, subject to customary adjustments. The all-cash transaction will be funded in part through an amended and restated $27.4 million senior secured credit facility with M&T Bank, which is the company’s existing lender. Pre-synergy net leverage at closing is expected to be less than 1x EBITDA.

Lake Street Capital Markets served as the financial advisor to Mama’s Creations in the acquisition, with Faegre Drinker Biddle & Reath LLP serving as legal counsel.

“Having watched and competed against Crown since the Creative Salads acquisition, we have always respected their ‘Grandma Quality’ principles, reinforcing our quality promise while expanding our operational capabilities, and we are excited to welcome them to the Mama’s family,” comments Adam L. Michaels, chairman and CEO of Mama’s Creations. “We have had the opportunity to get to know Andy and his team over the past few months (and) learn about the incredible work he has done to build a culture-first organization consistent with Mama’s culture, and we couldn’t be more excited to give him and his team the tools and support needed to realize their full potential. By opportunistically acquiring a profitable plant 10 miles from Farmingdale that runs the same grill platform, we gain immediate and de-risked capacity and clear synergies to our core business. We see a clear path to expand our product penetration across Crown’s premium customer base through cross-selling, and with its nearby New York facility, we anticipate a seamless integration that further enhances our ability to better service our new customers.”

“We believe we can increase Crown’s gross margins over time, closer to our current levels, through operational efficiencies and joint protein purchasing through our expanded supply chain, while more efficiently managing labor, machinery and logistics,” Michaels adds. “Taken together, we believe this is a highly complementary acquisition at an attractive 0.3x revenue multiple that will move us toward our 2030 vision of becoming the next $1 billion deli solutions provider. This also continues to validate our M&A strategy of acting as a consolidator in the space – first with Creative Salads & Olive Branch, then with Chef Inspirational Foods and now with Crown – we are able to find incremental and accretive businesses at very attractive multiples to accelerate and build our capabilities.”