By Erin Joyce
1-800-Flowers.com has snapped up goodie-gift seller The Popcorn Factory in a $12.2 million cash and stock deal.
The acquisition nets the Woodbury, NY-based online flower and gift seller a similarly-focused company, which sells premium popcorn, chocolates and other food gifts online and through its catalog. The purchase includes a customer database that stands at over one million and growing, said 1-800-Flowers.com, which bought the Illinois-based company from privately held Wand Partners, Inc.
1-800-Flowers.com’s Chief Executive Jim McCann said the acquisition includes a growing list of corporate accounts, which he said are the reason behind the company’s gross profit margins in excess of 45 percent.
Most important, McCann said, “the Popcorn Factory offers a strong brand name within the gift foods category” and brings with it a marketing and merchandising group focused on growing the gift-selling category, especially online.
According to a Securities and Exchange Commission filing today, 1-800-Flowers.com valued the acquisition at about $12.2 million in cash and stock, of which about $7.3 million would go into retiring The Popcorn Factory’s outstanding debt.
Because of the seasonality of The Popcorn Factory’s business (most of its sales are made during the holiday sales of the fourth quarter), 1-800-Flowers.com said the acquisition would hit its own cash earnings (earnings before interest, taxes, depreciation and amortizatin) in the short term by about $1 million.
Overall, however, 1-800-Flowers.com said the deal would add about $30 million a year to its revenues, which grew to about $115 million in its fiscal third quarter ending March 31st. As a result of strong sales during the Valentine’s Day holiday, the company was able to squeek out a profit of $165,000, or nothing per share, for the quarter.
As of March 31st of this year, 1-800-Flowers.com listed just over $60 million in cash and securities on its balance sheet.
During midday trading after the deal was announced, shares of 1-800.Flowers.com were up slightly by 15 cents to $14.15.