Compass Diversified Holdings (CODI) entered into a definitive agreement to sell the food‑service segment of its majority‑owned subsidiary, SternoCandleLamp Holdings, Inc., to Archer Foodservice Partners for an enterprise value of $292.5 million. The deal will include customary working‑capital adjustments and is expected to close in May 2026. In 2025, the divested business generated adjusted EBITDA of approximately $30.3 million, a figure that will be retained in the transaction.
The sale is a cornerstone of CODI’s aggressive deleveraging strategy. By converting the food‑service assets into cash, the company will use the proceeds to repay outstanding debt, with a projected senior secured net leverage ratio falling below 1.0× after the transaction. This move addresses the company’s breach of covenants and the risk of excess leverage fees beyond June 30 2026, while also restoring distribution capability and positioning CODI for a more sustainable capital structure.
The transaction preserves Sterno’s home‑fragrance business, which will continue under the Rimports name. Rimports, headquartered in Provo, Utah, was acquired by The Sterno Group in March 2018 and represents a higher‑growth, higher‑margin segment that CODI intends to focus on after the divestiture.
CODI’s financial challenges stem from the Chapter 11 bankruptcy of its Lugano subsidiary, accounting irregularities, and subsequent restatements. At the end of 2025, the company’s leverage ratio stood at 5.47×, well above its covenants. The sale is part of a broader portfolio‑sale program aimed at reducing leverage to 4.0× by the end of 2026 and ultimately targeting a long‑term leverage range of 3.0× to 3.5×.
CEO Elias Sabo said, "This transaction is a critical step in reducing leverage at CODI and reflects our commitment to taking decisive action — strategically selling businesses, rapidly deleveraging the balance sheet and addressing the gap between the market price and our intrinsic value." Investors responded favorably to the announcement, reflecting confidence in CODI’s renewed focus and improved balance‑sheet outlook.
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