Fortune International President and CEO Sean O’Scannlain is clarifying the details of a recently announced transaction in which Bahrain-based private equity firm Investcorp took an ownership stake in his Bensenville, Illinois, U.S.A.-based firm.
Fortune International LLC, which operates Fortune Fish and Gourmet and Fortune Imports, is a premium seafood and gourmet food distributor in the U.S. Midwest.
O’Scannlain told SeafoodSource the Investcorp deal was a recapitalization, not an acquisition, as cited by a 30 January press release from Churchill Asset Management issued on PE Hub and subsequently reported by SeafoodSource.
“The USD 105 million [EUR 95.1 million] you cite is solely the debt facility that the lenders who made the announcement participate in,” O’Scannlain said. “It in no way represents the transaction value or the valuation of Fortune.”
O’Scannlain said he remains the single-largest individual shareholder and he will remain the CEO and control specific board seats.
“Investcorp shares have no preference over mine and we are under typical covenants related to the debt, which are similar to what we were under with our lenders prior to the transaction,” he said. “We repurchased the shares of my original investors, and added additional equity and debt to fuel our acquisition growth. In addition, all pre-transaction debt was retired. As was the case prior to the transaction, we make it a practice to not release specific ownership details.
There will be no changes in management and as a result of the transaction, additional members of Fortune’s management team will be offered equity in the company, O’Scannlain said.
“The other management team member/shareholders remain shareholders and additional members of the management team will be offered equity too,” he said.
O’Scannlain said he chose Investcorp as a partner because the firm is “very sophisticated financially” and “brings a lot of experience to the table.”
“There will be almost no change at all to the company. All this means is we’ve gotten a capital partner who will help us continue our acquisition strategy,” he said, adding, “Investcorp is in full support of our acquisition growth strategy.”
As far back as 2016, O’Scannlain has clearly delineated an acquisition-focused strategy for Fortune.
“We will continue to look for opportunities amongst other regional players that it makes sense for us to look at acquiring,” he told SeafoodSource then. “Our acquisition streak will continue for sure, most likely in the Midwest, where we’re most comfortable operating. It could be in seafood, but we’re open to looking at anything in the gourmet space.”
After purchasing Coastal Seafoods in 2016, it bought Lobster Gram in 2017, then acquired Morey’s Seafood International’s Missouri operations in April 2019. These transactions were followed by its takeover of Classic Provisions Inc. of Minnesota in June 2019, and Alabama-based Jubilee Seafoods in July of last year.
O’Scannlain said the company is aiming to close three more acquisitions in 2020, fueled by the Investcorp capital. Targets include regional U.S. seafood companies and distributors of gourmet products. O’Scannlain said he would like to expand further out of his regional base in the Midwest into states like Iowa, Nebraska, Kansas, and Oklahoma.
The company had more than USD 300 million (EUR 274.8 million) in sales in 2019 and with the full-year accounting of the incorporation of the Morey’s, Classic Provisions, and Jubilee Seafoods acquisitions into Fortune’s bottom-line figures in 2020, O’Scannlain said he expects the company to get close to USD 400 million (EUR 366.4 million) in sales in 2020.
In a press release announcing the Investcorp deal, O'Scannlain said he looked forward to working in close coordination with Investcorp to grow Fortune into a strong, larger company.
"We are proud of the business we have built over nearly two decades and we are excited to embark on this next phase," he said. "We are confident that Investcorp is the ideal firm to serve as our first institutional capital partner, given their deep understanding of the foodservice distribution market, alignment with our vision, and their strong track record of scaling businesses. With the support of Investcorp’s resources and expertise, we believe that Fortune will be well positioned to execute on management’s growth strategy by providing customers with the best quality products and expanding in core and adjacent geographies, while continuing to uphold our rigorous sustainability standards.”
Investcorp Head of Private Equity - North America Dave Tayeh said his firm believed Fortune's future is bright.
“Specialty foodservice distribution in the United States is a highly fragmented, resilient and growing USD 40 billion [EUR 36.7 billion] market,” Tayeh said. “We believe that Fortune is well-positioned to capture significant share with its unique platform as a scaled, specialty seafood enterprise delivering superior product quality and service across a wide breadth of products. We have a long history of partnering with founder-led businesses, and we look forward to working with Sean and his talented team over the coming years.”
Photo courtesy of Sea Pact
