Heres Why Farmer Bros Co nasdaq Farm Soars over 74 in Pre market Trading

Here’s Why Farmer Bros. Co. (NASDAQ: FARM) Soars Over 74% in Pre-Market Trading?

Farmer Bros. Co. (FARM) experienced a remarkable surge of over 74% in pre-market trading today. This surge came after the leading coffee roaster announced its definitive agreement to sell its direct ship business, including its Northlake, Texas facility, to TreeHouse Foods, Inc. The deal is valued at around $100 million, subject to customary purchase price adjustments.

This strategic move will enable Farmer Bros. to pay off its outstanding debt associated with asset-based lending (ABL) and retire its term loan. In addition, the company plans to utilize the funds generated from the sale to enhance its balance sheet flexibility and focus on key areas such as execution, margin improvement, and strategic growth in the direct store delivery (DSD) and key account sales channels.

The sale is currently expected to close within the next 60 days, pending customary closing conditions. As part of the agreement, approximately 180 Farmer Brothers team members will transition to TreeHouse Foods, which will commence operations at the Northlake, Texas facility.

Following the closure, Farmer Brothers will shift its entire DSD production operations to its Portland, Oregon roasting and production facility. In addition, the company plans to maintain its existing relationships with third-party roasters to ensure additional capacity. Farmer Brothers will maintain its corporate headquarters in Northlake, Texas while continuing to lease office space at its current location.

Farmer Brothers’ DSD business is renowned for its coffee, tea, spices, and breakfast/brunch products. It operates through a vast network of 80 independent branches, five distribution centers, and nearly 240 routes, serving approximately 45,000 delivery points every year. Even after the sale of its Northlake, Texas facilities, the company anticipates annual revenue of approximately $350 million, accompanied by significantly improved product margins.