Whole Earth Brands: new actor enters stage

New York (NJ) / Chicago (IL). (web) Act II Global Acquisition Corporation, a publicly traded special purpose acquisition company, the owners of Merisant Company, one of the world’s leading manufacturers of zero and low-calorie sugar substitutes, and the owners of MAFCO Worldwide LLC, the world’s leading manufacturer of natural licorice products, announced that they have entered into a definitive business combination. Merisant and MAFCO comprise the operating subsidiaries of Flavors Holdings Inc. which is owned by affiliates of MacAndrews + Forbes Incorporated. Subject to the terms and conditions set forth in the Purchase and Sale agreement, Act II will combine with the businesses of Merisant, MAFCO and certain of their subsidiaries. Following the closing of the proposed transaction, it is expected that Act II will change its name to Whole Earth Brands and continue to be listed on the Nasdaq stock exchange. It is anticipated that, upon consummation of the proposed transaction, the company will have an anticipated initial enterprise value of approximately USD 575 million, or 8.1 times the Flavors Holdings’ estimated Calendar Year 2020 Pro Forma Ebitda of USD 71 million.

Merisant is one of the world’s leading manufacturers of tabletop non-caloric sweeteners. The company markets its products under its flagship brands Whole Earth®, Equal®, Canderel®, and Pure Via®, along with several other adjacent consumer products in over 90 countries.

MAFCO has been one of the world’s leading manufacturers of natural licorice products for over 150 years. MAFCO’s natural licorice products many of which are under the Magnasweet® brand are used today in a wide range of applications including food, beverage, pharmaceutical, confectionary, cosmetic, personal care and tobacco products.

Following the closing, it is expected that Whole Earth Brands will be led by Flavors Holdings’ existing management team, including Chief Executive Officer, Albert Manzone, and President of the Ingredients business, Lucas Bailey. Manzone has more than 25 years of experience in the consumer products industry and has been with Flavors Holdings since 2016. Bailey currently serves as President of MAFCO and has 15 years of experience in operational, financial and strategic planning and analysis roles. Irwin D. Simon will serve as Executive Chairman. Simon, founder and former CEO of Hain Celestial, currently serves as Chairman of Act II and is an accomplished leader and innovator in the natural foods industry.

Simon commented, «We are excited to create Whole Earth Brands, a global, industry leading platform, focused on on-trend food products and ingredients. We are in the early stages of the global secular consumer shift away from sugar and increased emphasis on natural ingredients and clean labels. Whole Earth Brands will be uniquely positioned as a global player addressing this sizeable opportunity and will provide a strong foundation for robust organic growth and future strategic acquisitions. Our brands, significant free cash flow and the highly accomplished leadership team combined with our public listing and flexible balance sheet will allow us to reinvest in the business in a way that has not been done before and execute an accelerated growth strategy, driving long-term shareholder value.»

«All of us are enthusiastic about the creation of Whole Earth Brands through this business combination. It is exciting to join forces with Irwin Simon and the team who pioneered the natural and organic foods industry and leverage their experience to help lead the business into its next phase of growth and beyond. We have built two complementary business segments with global infrastructure to support accelerated growth addressing the increasing demand for natural and low sugar alternatives around the world. Whole Earth Brands as a public platform will have the resources and expertise to accelerate growth, capitalize on a significant long-term opportunity and achieve our vision to enhance all of the product categories and channels we serve,» said Manzone.

Ronald Perelman, Chairman and Chief Executive Officer, MacAndrews and Forbes Incorporated commented, «We are very excited to join with Irwin and Act II who have been true pioneers in the natural foods industry on this new venture. Flavors Holdings’ portfolio of iconic and trendsetting brands have global reach and deep resonance with their consumers. Irwin Simon has been a friend for years and repeatedly demonstrated his vision as to the direction and changes in the natural food and ingredients industry. Taking the company public and partnering with Irwin Simon and team will continue to elevate and drive new global growth for these brands in the natural food segment around the world.»

Highlights of the Proposed Transaction

Whole Earth Brands will be well positioned in the global food products and ingredients industry to benefit from powerful consumer-driven health and wellness trends, including:

• The global secular consumer shift away from sugar
• Growing demand for clean labels
• Increased customer focus on plant-based consumer packaged goods

Whole Earth Brands will operate a proven global platform that can be leveraged to support new product development, further geographical expansion and pursue future M+A activity.

• Existing global reach serving 100 plus countries and long-standing blue-chip customer relationships
• Strong and stable free cash flow supports reinvestment and M+A
• Experienced management team with a track record of successful business integration and systems in place to drive synergies

The business is poised to increase innovation and expand distribution which will accelerate organic growth through:

• A demonstrated ability to introduce new products and drive sales to new consumers in new geographies
• A robust new product pipeline across both business segments
• Existing distribution footprint to bring new products to existing markets
• Strong relationships and global platform that will allow for rapid expansion into new and under-penetrated markets

Additional Transaction Terms and Conditions

Subject to the terms set forth in the agreement, the transaction will be funded through a combination of cash available in the trust, roll-over stock and debt financing. At closing, the owners of Merisant and MAFCO will receive USD 510 million in total consideration, consisting of USD 450 million in cash and 6 million shares of Class A Ordinary Shares of Act II, subject to adjustment in accordance with the terms of the definitive agreement. In addition, at closing, the owners of Merisant and MAFCO will receive 1 million shares of Class A Ordinary Shares of Act II placed in escrow, subject to release in accordance with the terms of the definitive agreement. At closing, Act II is required to have at least USD 170,000,000 available to it from its trust account created in connection with its initial public offering, after payment to holders of Act II common stock that seek redemption in connection with the transactions and net of certain other expenses.

Furthermore, the Merisant and MAFCO owners will have the opportunity to receive incentive earnout shares totaling approximately 2.7 million shares consisting of (i) 1.4 million shares, issuable if, among other things, the volume weighted-average per share trading price of the Class A Ordinary Shares is at or above USD 14 per share for twenty trading days in any thirty day continuous trading period, and (ii) approximately 1.3 million shares, issuable if, among other things, the volume weighted-average per share trading price of the Class A Ordinary Shares is at or above USD 16 per share for twenty trading days in any thirty day continuous trading period.

Act II has received a commitment from TD Bank to provide for the contemplated debt financing.

DLA Piper LLP (US) served as legal advisor to Act II for the transaction. Goldman Sachs + Co. LLC and Moelis + Company LLC served as financial advisors to Act II. Cantor Fitzgerald + Co. served as capital markets advisor to Act II. Wachtell, Lipton, Rosen + Katz served as legal advisor to Flavors Holdings. Citi acted as financial advisor to Flavors Holdings.

The board of directors of Act II has unanimously approved the proposed transaction. Completion of the proposed transaction, which is currently expected by the end of the first quarter of 2020, is subject to customary closing conditions, receipt of approvals from Act II’s stockholders, and completion of the offer for Act II’s stockholders to redeem their shares. The description of the agreement is not complete, and investors should review the materials to be filed with the Securities and Exchange Commission in connection with the proposed transaction.

About Act II Global Acquisition Corporation

Act II is a blank check company formed for the purpose of effecting a merger, share exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses that completed its initial public offering in April 2019. Act II focuses on companies in the «better for you» sectors, such as consumer packaged goods and other consumables as well as hospitality, including restaurants. The Company is led by 25-year organic and natural products industry visionary Irwin D. Simon, Executive Chairman.

Simon has more than 30 years of business experience in many domestic and international leadership and operating roles. Simon founded The Hain Celestial Group Inc. (NASDAQ: HAIN) in 1993, which went on to become a leading organic and natural products company with a mission to be the leading marketer, manufacturer and seller of organic and natural, better-for-you products, committed to growing sustainably while continuing to implement environmentally sound business practices and manufacturing processes. He led Hain Celestial for more than 25 years and grew the business with operations in North America, Europe, Asia and the Middle East. Prior to Hain Celestial, Simon held various marketing and sales positions at a variety of international consumer goods and food companies.

About Whole Earth Brands

Following the closing, the combined company will be rebranded as Whole Earth Brands. Whole Earth Brands will look to expand its branded products platform through investment opportunities in the natural alternatives and clean label categories across the global consumer product industry. Over time, Earth Brands will look to become a portfolio of brands that Open a World of Goodness™ to consumers and their families. Whole Earth Brands expects to list on the NASDAQ stock exchange in connection with the closing.

About Flavors Holdings Inc.

Flavors Holdings Inc., is an indirect wholly owned subsidiary of MacAndrews + Forbes Incorporated. Flavors has two operating units, MAFCO Worldwide Corporation and Merisant Company. Merisant is one of the world’s leading manufacturers of tabletop sweeteners. Merisant markets its sweeteners under its flagship brands Equal, Canderel and Pure Via, an all-natural sweetener Whole Earth, along with several other brands in more than 90 countries. MAFCO is a world leader in quality licorice products and specializes in manufacturing licorice extract and related derivatives for use as an enhancer, modifier and moistening agent in various consumer products. MAFCO’s primary brand of sweetening and flavor extending products is Magnasweet.

About MacAndrews + Forbes

MacAndrews + Forbes Incorporated owns and operates a diverse array of businesses, tapping into the broad expertise of its management team to support the delivery of best in class products and services to end users and consumers all over the world. Wholly owned by Chairman and Chief Executive Officer Ronald O. Perelman, MacAndrews + Forbes’ primary objective is to build, run, and grow great businesses. Our core strategy is to focus our business lines on strong market positions, high quality management with vertical expertise, recognized growth potential and ability to increase productivity. MacAndrews + Forbes’ businesses span a wide range of industries, from global leaders in cosmetics to biotechnology and military equipment.