Coffee wholesaler Westrock announced today it is merging with Riverview Acquisition, a special purpose acquisition company (SPAC), to go public in a transaction that values the combined company at just over $1 billion. Upon the closing of the transaction, expected to happen by the end of Q3 2022, the combined company will be named Westrock Coffee Company and is expected to be listed on the Nasdaq exchange under the ticker symbol “WEST.”
What is the agreement?
The merger will deliver around $500 million in gross cash proceeds, according to a press release, with half coming from $250 million in common stock PIPE commitments, including $60 million from R. Brad Martin, NFC Investments and the other Riverview Acquisition Corp. founders, as well as $25 million from Westrock’s founders, and $78 million each from HF Capital, the Haslam family investment office, and funds managed by Southeastern Asset Management.
Wells Fargo has committed to financing Westrock to the tune of a $150 million long-term loan and a further $150 million revolving loan commitment.
All of Westrock Coffee’s existing shareholders will roll 100% of their shares into the new company and will hold approximately 53% of the shares of the combined company on closing.
“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 Scott Ford, CEO and Co-Founder of Westrock Coffee.
According to a release, the merger will allow Westrock to accelerate construction of its 524,000 square-foot facility in Conway, Arkansas, which will be the largest roasting to ready-to-drink packaging facility in the U.S. upon completion, as well as drive further expansion to support its “blue-chip customers” in Europe, Asia Pacific, and the Middle East.
“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 R. Brad Martin, CEO of Riverview. “I’m pleased that we are able to announce today that we have achieved that objective in our proposed merger with Westrock Coffee.”
What is Westrock?
Through investments in infrastructure and M&A, Arkansas-based Westrock Coffee has quietly built itself into one of the largest coffee wholesalers in the U.S. Founded in 2009, the company is a longtime supplier to foodservice, hospitality and convenience accounts that also offers a range of packaged coffee products at retail that highlight its responsible business practices, including supporting economically and environmentally sustainable supply chains for partner farmers. Earlier this year, it announced that 100% of its coffee and tea will be “responsibly sourced” by 2025.
In December 2021, the company announced the construction of its Conway plant, which will include quality assurance and product R&D labs while utilizing “state-of-the-art equipment, including advanced robotics” to produce canned or bottled cold brew coffees, lattes, assorted teas, and juice-based products as well as single-serve coffee cups.
Why go public?
After making a series of strategic moves to strengthen the company and consolidate various units under a single identity — as with its purchase of S&D Coffee & Tea in 2020 — Westrock is seizing on current momentum to make the jump from domestic to global coffee player.
The company clearly has its sights on increasing its stake in the global coffee and tea market, a total addressable market of $37 billion in Westrock’s core business. Westrock’s investment highlights frame the company as “a highly scalable platform” that offers a range of “high quality beverage solutions.” Net revenue is projected to grow to around $960 million in 2022, with adjusted EBITDA set to rise around 60% to $75 million.
With supply train transparency being a part of Westrock’s mission-driven approach, the company also highlighted the “creation and management of a sustainable and digitally traceable supply chain from the original farmer transaction through the finished consumer packaged good[s]” as a point of differentiation.