Information on the Target

Mike and Mike's Inc., founded in 2004 and based in Woodbridge, Ontario, Canada, is a distributor specializing in fresh certified organic fruits and vegetables. The company sources its products both from the United States and internationally, in addition to locally sourced items from British Columbia, Ontario, and Quebec. Beyond produce, Mike and Mike's also offers a range of grocery and snack products.

With a diverse clientele of over 200 customers, including national chains, independent retailers, wholesalers, and food service companies, Mike and Mike's positions itself as a key player in the fresh produce sector. The company's experienced team, led by co-founders Mike Fronte and Mike Dattoli, continues to focus on growth and expansion in a competitive market.

Industry Overview in Canada

The fresh produce distribution industry in Canada is characterized by an increasing consumer demand for organic and locally sourced foods. As health consciousness rises and environmental awareness grows, consumers are becoming more selective about the products they purchase. This shift is fostering the growth of organic food distributors like Mike and Mike's, which cater to these demands.

Canada's produce market also benefits from strong agricultural sectors in provinces like British Columbia and Ontario, which provide high-quality fruits and vegetables. The proximity to these agricultural resources combined with the country’s established import networks allows Canadian distributors to sustain a reliable supply of fresh produce.

Furthermore, the COVID-19 pandemic has accelerated the shift toward e-commerce in the food supply chain, prompting many distributors to expand their online presence and delivery services. Companies that can adapt to these trends are likely to thrive in the evolving marketplace.

Overall, the Canadian fresh produce industry presents significant opportunities for growth, particularly for companies focusing on health and wellness, as well as those capable of efficiently managing logistics and distribution networks.

The Rationale Behind the Deal

The acquisition of Mike and Mike's by Fresh Direct Produce aligns with Fresh Direct's strategic objective to broaden its distribution capabilities and enhance its product offerings within the Canadian market. By integrating Mike and Mike's extensive network of customers and established operations, Fresh Direct aims to expand its reach and improve its service levels across the country.

Additionally, this transaction marks Fresh Direct's third add-on acquisition, showcasing HKW's continued commitment to investing in health and wellness-focused businesses. The acquisition not only emphasizes Fresh Direct's quality service but also strengthens its competitive advantage in a growing and increasingly health-oriented market.

Information about the Investor

HKW is a prominent middle-market private equity firm with a strong focus on investing in businesses with capable management teams in the U.S. and Canada. Established in 1982, the firm concentrates on sectors such as Business Services, Health & Wellness, and Technology. Over the years, HKW has successfully sponsored 63 platform transactions alongside 69 add-on acquisitions, showcasing its dedication to fostering growth and innovation within the companies it partners with.

HKW's investment philosophy centers on supporting businesses like Fresh Direct Produce that have a significant potential for expansion, particularly in the health and wellness sector, which is becoming increasingly vital in today's market landscape. By leveraging its vast resources and expertise, HKW enables its portfolio companies to maximize their potential and address emerging consumer trends effectively.

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The partnership between Fresh Direct Produce and Mike and Mike's is a strategic move that could deliver substantial long-term benefits. The acquisition enhances Fresh Direct's market presence in Canada, allowing it to capitalize on the growing demand for organic and health-focused food products. By acquiring an established distributor with a loyal customer base, Fresh Direct is well-positioned to expand its operational footprint.

Moreover, Mike and Mike's leadership and experienced management team will provide continuity and expertise in navigating the complexities of the fresh produce market. This aspect is crucial for maintaining high service levels and ensuring seamless integration into Fresh Direct’s existing operations.

Given the increasing consumer shift towards organic products and the potential for growth in this sector, this deal appears to be a strong investment. With the supportive backing of HKW and Fresh Direct’s strategic goals, there is significant potential for Mike and Mike's to thrive, driving revenue growth and enhancing market share.

In summary, this acquisition could represent a pivotal chapter for both Fresh Direct Produce and Mike and Mike's. With a clear focus on health and wellness, along with a robust operational strategy, this investment has the potential to be very fruitful, benefitting stakeholders and consumers alike.

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