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Derrimon acquires 80 per cent stake in NY-based food stores

BY KELLARAY MILES
Business reporter
milesk@jamaicaobserver.com

Wednesday, January 13, 2021

Derrimon Trading Limited (DTL), through its two latest acquisitions in the United States, has gained a controlling interest or 80 per cent stake in wholesale food distributor FoodSaver New York Inc (FoodSaver NY) and specialty supermarket Good Food for Less LLC (Good Food NY).

The acquisitions considered at a cost of approximately US$8.9 million will provide Derrimon with greater access to markets and more customers as the company moves to push its products globally. Derrimon, through an incorporation of New York subsidiary Marnock LLC, will acquire control of the Brooklyn-based operations as a going concern. The consideration for the acquisitions will be in the form of both cash and shares and will result in Marnock issuing a 20 per cent minority interest to Oralcrys LLC — an entity beneficially controlled by the former operator of the businesses. The acquisitions are expected to be completed by the first quarter of this year.

“These acquisitions will add significantly to our bottom line, through the foreign currency we will get from the exchange gains. It is already a profitable business and we are going to enhance the operations and make it bigger. We will be adding new lines and see how best we can reduce the cost of exporting goods. The businesses have been doing well and have remained profitable even amid the COVID-19 pandemic,” said Derrick Cotterell, chairman and chief executive officer (CEO) of DTL, in an interview with the Business O bserver on Monday.

“We are planning to grow, not just internationally but locally. We're looking at the Caribbean, North America and Jamaica, as we aspire for greater growth in these markets,” Cotterell said while speaking to the company's plan for future growth.

Cotterell noted that the acquisitions were also expected to help the company further expand its e-commerce platform, which locally has seen significant growth since the onset of the pandemic.

“These overseas locations will be used as a fulfillment centre for shopsampar.com, allowing us to send products all over the world. The businesses there [currently] does not have an e-commerce platform, so this will provide further enhancement for us to operate in that space. We're therefore trying to secure a third business from these acquisitions through e-commerce from that location,” he further told the Business Observer.

FoodSaver NY, an over 23-year-old company located at 402 East 83rd street in New York, adjacent to the Brooklyn Terminal Market, is an entity which carries a full line of grocery supplies and produce along with a meat processing facility. Good Food NY, on the other hand, is a specialty supermarket which carries products targeted to suit the needs of the African and Caribbean Diaspora residing in the popular New York tri-state area.

“At these locations, we already have a captive market and the business in which we are entering into is one with which we are familiar,” Cotterell said noting that the company's local line of Select and Delect brands and Caribbean flavors and fragrances products, sold at at its Sampars and Select stores will be readily stocked at these overseas locations.

Derrimon, through its recently launched additional public offering (APO) of shares, is seeking to raise $3.5 billion in equity, the proceeds from which the junior stock exchange listed company said will be used to finance debt repayments and facilitate expansion projects. Part or all of the cash consideration for the acquisitions are also to be paid from the net proceeds of this capital raise. In the APO scheduled to close in the next 13 days, DTL is issuing some 1.5 billion in new ordinary shares with the potential to upsize by an additional 301.3 million shares, capping the maximum to be gained from the raise at $4.2 billion.