Westrock Coffee Holdings of Little Rock is expected to formally close on a merger Monday morning that will take the coffee and tea producer public with shares projected to begin trading that morning at $10 at the Nasdaq market’s opening bell.
Scott Ford, the company’s co-founder and chief executive officer, said Westrock will embark on a global acquisition strategy that will ignite growth in the coming years with the goal of creating the world’s largest coffee, tea and extract-product business.
Westrock has attracted nearly $300 million from private investors and another $350 million credit line during the merger process, Ford said in an interview.
“We have $650 million in new money coming in that will allow us to pay down most of our debt and put cash on our balance sheet,” Ford said, noting that the cash will help drive acquisitions and support a manufacturing expansion underway in Conway.
Westrock began operations in 2009 in Rwanda to help provide a fair wage to coffee growers.
“From that work, we have turned into the largest provider of these kinds of products in the United States to the biggest brands in the world,” he added. “We want to go from being the largest in the United States to the largest and best, globally, in the next five years. We had to access the public markets to get the quantity of capital to be able to build plants and buy businesses overseas.” Major investors in the effort to take Westrock public include Riverview Acquisition Corp. of Memphis; Southeast Asset Management, a Memphis-based investment management firm; Jimmy Haslam, owner of the Cleveland Browns of the National Football League and chairman of Pilot Flying J truck stops and convenience stores; and the Ford family, which is led by Scott and his father, Joe, also a co-founder of Westrock.
“That is money that is going in at $10 per share of common stock, just like everybody in the retail public can invest” in the company, Ford said.
That investment was made through a PIPE process — Private Investment in Public Equity — that is structured to help a company raise capital.
Another $47 million is being contributed from investors in the special purchase acquisition company set up by Riverview, which is the other entity involved in the merger.
Wells Fargo, based on the fundraising effort, also will contribute a $350 million line of credit to fuel Westrock’s expansion.
“That gives us the money to do what we told [investors] we were going to do, which is build out Conway and make acquisitions overseas to expand our footprint,” Ford said. “Now we have enough money to go execute our plan.” Westrock was initially valued at $1.086 billion when the merger was announced in April. Today that has increased to an equity value of about $1.2 billion based on the company’s fundraising achievements, Ford said.
In December, Westrock announced plans to double the size of its facilities in Central Arkansas as part of a multi-year project in Conway that also will increase production in North Carolina and Malaysia. The Conway investment is projected to reach about $200 million.
The Conway plant is a 524,000-square-foot manufacturing operation that will be expanded over time and include about 100 employees when it begins with three production lines in the first quarter of 2024. “We are on track and on budget to do that,” Ford said.
Over time, the plant should grow to about 300 employees “as we install and turn on the two-thirds remaining capacity in that plant,” Ford said.
Westrock opened its first roasting facility in North Little Rock in 2010 and reached an agreement with Walmart to put Westrock coffee on store shelves. That deal was key to the company’s early success and laid the foundation for its growth, Ford said. “Walmart was the first company to go and say we believe in this local business and because of them we exist in Arkansas today,” he added.
In the second quarter that ended June 30, Westrock reported a loss per share of 4 cents, flat from the same period in 2021. Year to date, net sales were up 26% to $409.8 million compared with $326.5 million in 2021, Westrock, with offices in 10 countries, has about 1,200 employees and sources coffee and tea from 35 origin countries. The Little Rock-based company also has major production, warehousing and distribution facilities in North Little Rock.
It is a fully integrated company with services that include coffee sourcing, supply chain management, product development, roasting, packaging and distribution for the retail, food service and restaurant, convenience store and travel center, consumer goods packaging and hospitality industries around the world.
Westrock executives are scheduled to ring the opening bell Wednesday at the Nasdaq stock market.