The Coastal Companies, a Laurel, Maryland-headquartered produce distributor and processor owned by Arlon Group, has acquired prepared foods provider Hearn Kirkwood for an undisclosed sum.
The Coastal Companies plans to invest in Hearn Kirkwood’s value-added processing facility in Jessup, Maryland, and maintain the business as a distinct subsidiary focused on prepared foods, the firm said.
John Corso, chief executive of The Coastal Companies, said the acquisition will enable the company to enter “new and exciting markets,” as well as expand its suite of “grab-and-go” offerings and processing capabilities.
Representatives for The Coastal Companies and Arlon did not return messages seeking further detail by press time.
Arlon, a food and agriculture-focused investment firm, acquired The Coastal Companies from MSouth Equity Partners, a private equity firm based in Atlanta, Georgia, for an undisclosed sum in May 2015.
Capital for the investment came from Arlon’s Food and Agriculture Partners II, which had raised $198.2 million from 30 investors as of late 2016, according to a regulatory filing.
In addition to bulk and pre-cut produce, meat, seafood and poultry, Hearn Kirkwood provides sandwiches, wraps, salads and snacks to customer types including restaurants, retailers, hotels and others. Founded in 1946 and based in Hanover, Maryland, Hearn Kirkwood has distinct units devoted to wholesale, processed and raw materials and sources its produce from both local and national farmers.
The company has 110,000 square feet of space between two facilities, as well as its facility in Jessup.
The Coastal Companies’ other units are Coastal Sunbelt Produce, which is focused on distribution of perishables, and fresh cut and organic produce specialist East Coast Fresh.
New York-based Arlon was founded as a unit of Arlon, Belgium-headquartered Continental Grain Company. It is also an investor in Boulder Food Group, a venture capital firm that closed its second fund on $103.3 million in March.
A report by mid-market investment bank Brown, Gibbons, Lang & Company in March said private equity buyers are among the most active investors in a fragmented food distribution market confronted with changes in distribution channels and consumer demand.
The report found that while consolidation in the food distribution market over the previous 15 years had left the five largest companies with a 35 percent share of the market, the remainder are distributed among approximately 15,000 regional and local operators.
Last week, the C$392 billion ($290.3 billion; €260.9 billion) Canada Pension Plan Investment Board invested C$200 million into Premium Brand Holdings, a collection of food manufacturing and distribution businesses that trades on the Toronto Stock Exchange.