Universal corporation (nyse:uvv) entered into a stock purchase agreement to acquire fruitsmart, inc. from james p. early, james e. gauley and scott a. evenson for approximately $110 million.

Universal corporation (nyse:uvv) entered into a stock purchase agreement to acquire fruitsmart, inc. from james p. early, james e. gauley and scott a. evenson for approximately $110 million on november 20, 2019. the total consideration is subject to certain adjustments. under the transaction, universal will pay approximately $80 million in cash and earnout payments totaling $25 million, based on fruitsmart achieving certain financial targets in calendar years 2020 and 2021. at closing universal will deposit $0.4 million under r&w retention escrow amount, $5 million under indemnification escrow amount and $0.5 million under working capital escrow amount. pursuant to the escrow agreement, on the 12-month anniversary of the closing date, the remaining amount of the r&w escrow fund minus (1) $0.2 million and (2) any pending claims made in compliance with the agreement, shall be released, and (b) on the three-year anniversary of the closing date, the remaining amount of the r&w retention escrow fund shall be released, subject to reserves for any pending claims, on the three-year anniversary of the closing date, the remaining amount of the indemnification escrow fund shall be released and working capital escrow amount shall be released upon the final determination of final net working capital and any related adjustments to the closing payment. in connection with the consummation of the acquisition, fruitsmart will enter into new leases with its affiliate landlords which contain purchase options to acquire the two primary facilities used by fruitsmart in conducting its business for a total of $16.5 million. universal corporation expects to fund the transaction with a combination of cash on hand and existing borrowing capacity. following the transaction, fruitsmart will become a wholly- owned direct or indirect subsidiary of universal and terry chambers, president of fruitsmart, will continue to lead the fruitsmart business as president. the transaction is subject to regulatory approvals, including the expiration or early termination of the waiting period under the hart- scott- rodino antitrust improvements act of 1976, as amended, and other customary closing conditions and deliverables. the transaction is expected to close in the fiscal year 2019. universal corporation anticipates this acquisition will be accretive to earnings the first fiscal year following closing. william weigand of davis wright tremaine llp acted as legal advisor and cascadia capital, llc acted as financial advisor to james p. early, james e. gauley and scott a. evenson. john owen gwathmey of troutman sanders llp acted as legal advisor and jpmorgan chase & co. (nyse:jpm) acted as financial advisor to universal corporation. j.p. morgan chase bank acted as escrow agent in the transaction.
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