CODI-PB · Compass Diversified

Compass Diversified executed the divestiture of Sterno’s food service business through a structured merger with WCHG Buyer, Inc. (affiliated with Archer Foodservice Partners and Wynnchurch Capital), following the pre-closing distribution of the home fragrance business (Rimports) to stockholders on April 30, 2026. This preserved CODI’s majority ownership in Rimports while monetizing the food service segment at an enterprise value of $292.5 million. After customary adjustments for working capital, transaction expenses, change-of-control payments, and allocations to non-controlling stockholders, CODI received approximately $282 million at closing, comprising repayment of intercompany loans (including $26.3 million principal and interest per pro forma) and equity proceeds (~$256 million). A $2.6 million escrow holds potential true-ups favoring the buyer. The proceeds directly target repayment of the 2022 Term Loan under the senior credit facility, with pro forma adjustments reflecting a $256 million debt reduction as of December 31, 2025, aiming to lower the senior secured net leverage ratio below 1.0x by June 30, 2026, thereby avoiding associated fees. CEO Elias Sabo highlighted the transaction’s role in deleveraging amid macroeconomic challenges, executed at a favorable valuation with Raymond James and Jefferies as advisors. CODI anticipates booking a gain in Q2 2026, with unaudited pro forma financials illustrating the disposition’s impact, including a $78.8 million pre-tax gain offset by $19.2 million tax expense.