Cullen Agricultural Holding Corp., Waynesboro, Ga., and Long Island Brand Beverages LLC (LIBB), Hicksville, N.Y., jointly announced that they have entered into a definitive agreement to merge their respective companies.
“We are excited to announce the merger with LIBB, which we believe has a differentiated brand in a fast-growing segment of the beverage market,” said Paul Vassilakos, chief executive officer of Cullen, in a statement. “The segment is growing quickly as teas edge out other bottled beverages that consumers consider unhealthy. We believe favorable market dynamics and consumer trends combined with Long Island Iced Tea’s premium ingredients, bold taste and strong brand awareness will enable it to maintain strong growth in the Northeast and expand to other markets in the future.”
LIBB’s ready-to-drink (RTD) Long Island Iced Tea is available throughout a multitude of distribution points in the Northeast, including supermarkets, convenience stores as well as wholesalers. The company’s products can be found at select supermarkets such as A&P, Waldbaums, Pathmark, ShopRite, Stop & Shop, King Kullen, Western Beef, Keyfood and many other retail locations.
Citing data from Los Angeles-based IBISWorld’s January 2014 report titled “RTD Tea Production in the US,” the companies noted that the RTD tea category has grown 6.1 percent annually from 2009 to 2014 and is forecast to grow more than 10 percent annually during the next five years. Sales in the RTD tea segment are expected to have reached $5.3 billion in 2014, the report also noted.
“Consumers are looking for healthier beverages, and iced tea is increasingly filling that need, but there is significant room within the iced tea category for better products,” said Philip Thomas, chief executive officer of LIBB, in a statement. “Our passion is offering consumers a healthier iced tea alternative using premium ingredients at an affordable price. We believe combining our business with Cullen will allow us to continue to build our brand awareness and offer broader distribution to make access to our teas easier for even more consumers.”
The merger agreement denotes that, upon the closing, the former members of LIBB will receive an aggregate of 39,500,000 shares of common stock of the combined company, subject to adjustment, representing approximately 63 percent of the outstanding stock of the combined company, with the Cullen shareholders owning the remaining 37 percent. Certain LIBB members, including Thomas, will execute lock-up agreements restricting their sale of the stock to be received by them in the transaction for a period of 12 months, the companies report.
Upon consummation of the transaction, Thomas will become chief executive officer of the combined company. The newly combined company will be named “Long Island Iced Tea Corp.” to reflect the combined companies’ business going forward.
The parties will seek to consummate the transactions in the first quarter of 2015, subject to the satisfaction of customary closing conditions.