CoolBrands CEO Michael SerruyaFernando Morales/The Globe and Mail
Former frozen desserts company CoolBrands International Inc. will merge with hygiene services company Swisher International Inc. in a share-swap transaction worth $102.9-million.
CoolBrands chief executive officer Michael Serruya said the Toronto-area company has been "sitting on a bucket of cash - call it $65-million or so" since exiting the ice cream business three years ago.
Since then, it has been waiting for what it felt was the right merger opportunity.
The hygiene and sanitation market is worth $37-billion (U.S.) in the United States, Mr. Serruya said, with Swisher focused on the food service, health-care and retail industries.
"It's a relatively high-growth market and that was one of the attractions for us to merge with Swisher," Mr. Serruya said in an interview from Markham, Ont.
"We believe that it's a real hot spot area that they're in."
He said CoolBrands has effectively been a shell company after selling off assets like its popular Eskimo Pie ice cream dessert to Nestlé SA and other labels to U.S. private equity players in what he described as a "highly competitive" industry.
"CoolBrands is very well capitalized and it will provide Swisher with a platform both to enhance its organic growth and it will help it step up its acquisition strategy."
As a result of the transaction announced Wednesday, Swisher will become a publicly traded company on the Toronto Stock Exchange and is expected also to list on a U.S. exchange, he said.
Swisher was founded by Americans Wayne Huizenga and Steve Berrard, the two entrepreneurs who created video rental chain Blockbuster Entertainment, as well as other businesses.
"By joining with CoolBrands and leveraging its status as a public company and its strong financial liquidity, we will be able to act decisively and quickly to realize Swisher's potential."
CoolBrands said all outstanding common shares of Swisher will be exchanged for about 57.8 million shares in CoolBrands, with most of the shares held under lock-up agreements.
Once the transaction is completed, CoolBrands shareholders will own about 52 per cent of Swisher, with the remainder in the hands of other investors.
Mr. Surreya said he will serve on Swisher's board of directors and will stay on to help Swisher develop its franchises.
"I will certainly be involved in helping grow that side of the business."
Swisher is based in Charlotte, N.C. and provides restroom and sanitizing services to restaurants, retailers, institutions and other businesses.
The agreement is expected to close by Nov. 30.