HF Foods Group Completes Acquisition of Searay Foods & Morgan Foods

What Happened

• HF Foods Group Inc. announced it completed the previously announced acquisition of Searay Foods Inc. (Searay Canada) and Morgan Foods Inc. on August 31, 2026 under a Securities Purchase Agreement (originally dated July 17, 2026, amended Aug 27, 2026). The aggregate base purchase price was CAD$47,921,740 (five times baseline Adjusted EBITDA of CAD$9,556,348, plus CAD$140,000). Payment at closing consisted of CAD$38,365,392 in cash and issuance of 1,701,871 shares of HF Foods common stock priced at USD$4.00 per share. Sellers are also eligible for contingent earnout payments tied to EBITDA targets over a two- to three-year period.

Key Details

• Closing date: August 31, 2026; press release filed September 3, 2026 (Exhibit 99.1).
• Total base purchase price: CAD$47,921,740 (based on baseline Adjusted EBITDA CAD$9,556,348).
• Consideration paid at closing: CAD$38,365,392 cash + 1,701,871 shares issued at US$4.00 per share.
• Amendment terms: earnouts subordinated to Buyer Entities’ credit facilities; deferred earnout payments accrue simple interest at SOFR + 2% per year; certain third‑party consent requirements were waived as a closing condition with uncapped indemnity by Sellers; Buyer Entities may assign rights to affiliates or as collateral.
• Financing/credit: HF Foods and its lenders (JPMorgan Chase as administrative agent) agreed to a Consent allowing Searay Canada, Morgan Foods and related subsidiaries to join the Third Amended and Restated Credit Agreement within five business days after closing; the Searay Acquisition Reserve was released per the Credit Agreement.

Why It Matters

• The acquisition is a material strategic transaction for HF Foods that expands its operations through purchase of two Canadian food companies for approximately CAD$48M in base consideration, combining cash and newly issued equity. Investors should note immediate cash outflow and equity issuance at closing (1.7M shares at US$4.00), plus potential future earnout obligations tied to performance.
• The earnouts are subordinated to the borrower credit facilities and may be deferred with interest (SOFR + 2%), which affects the payment priority and timing relative to lenders. Adding the acquired businesses to the company’s credit agreement and releasing the acquisition reserve are important financing details investors should watch as they affect the company’s leverage and lender relationships.