Shares of Inventure Foods Inc. (NASDAQ: SNAK) saw one of their better gains in the market on Wednesday, after the firm said that it plans to sell its frozen food business. According to the deal, the firm will sell the business, including the Rader Farms and Willamette Valley Fruit Company brands, as well as certain assets, rights and properties related to its frozen fruits, vegetable blends, beverages, and frozen desserts, to Oregon Potato Company for total cash consideration of $50.0 million.
Although $50 million might not seem like a lot of money in the grand scheme, keep in mind that prior to Wednesday this company had a market cap of roughly $65 million.
Also, prior to this announcement, the stock was down 66% year to date, and it seems like now could be the start of a turnaround for this snack maker.
This transaction is expected to be completed in September 2017, and management believes that this represents an important step in the company’s ongoing strategic and financial review process to maximize shareholder value.
The proceeds from the transaction will be used to repay in full the indebtedness under the company’s revolving credit facility with Wells Fargo Bank, National Association and the other lenders.
Terry McDaniel, CEO of Inventure Foods, commented:
We are pleased to enter into an agreement for the sale of our frozen business. This is a significant second step under our strategic and financial business review. We intend to use the proceeds from the transaction to further reduce our debt and improve our overall financial flexibility in order to allow us to focus on continuing to grow our leading snack business as we finalize our strategic review.
Shares of Inventure were last seen up about 24% at $4.15, with a consensus analyst price target of $10.00 and a 52-week range of $2.96 to $10.15.