Compass Diversified (NYSE: CODI) sells Sterno food service business for $292.5M to cut leverage
Filing Impact
Filing Sentiment
Form Type
8-K
Rhea-AI Filing Summary
Compass Diversified agreed to sell the food service business of its majority-owned subsidiary Sterno to Archer Foodservice Partners for an enterprise value of $292.5 million, subject to customary adjustments. In 2025, the business generated subsidiary Adjusted EBITDA of about $30.3 million, including shared overhead that will remain after closing.
The company plans to use net proceeds to repay outstanding debt and expects its senior secured net leverage ratio to fall below 1.0x, helping avoid excess leverage fees beyond June 30, 2026. CODI will retain Sterno’s home fragrance operations, which will continue under the Rimports name. The transaction is subject to regulatory and other customary closing conditions and is expected to close in Q2 2026.
Positive
- Debt reduction and lower leverage: CODI plans to use net proceeds from the $292.5 million Sterno food service sale to repay debt and expects its senior secured net leverage ratio to fall below 1.0x, potentially cutting interest-related fees after June 30, 2026.
Negative
- None.
Insights
Large divestiture aimed at debt reduction and lowering leverage costs.
Compass Diversified is selling Sterno’s food service business for an enterprise value of $292.5 million. The 2025 subsidiary Adjusted EBITDA of roughly $30.3 million indicates this is a sizable asset within the portfolio.
Management plans to direct net proceeds to repay outstanding debt, and expects its senior secured net leverage ratio to fall below 1.0x. They also expect to avoid fees tied to excess leverage after June 30, 2026, which should reduce interest and fee burdens if completed as described.
CODI will retain the Rimports home fragrance business, which contributed Adjusted EBITDA of about $28.1 million in 2025. Overall impact will depend on execution of the sale, regulatory approvals, and how effectively CODI redeploys balance sheet capacity following deleveraging.
8-K Event Classification
3 items: 1.01, 8.01, 9.01
3 items
Item 1.01
Entry into a Material Definitive Agreement
Business
The company signed a significant contract such as a merger agreement, credit facility, or major partnership.
Item 8.01
Other Events
Other
Voluntary disclosure of events the company deems important to shareholders but not covered by other items.
Item 9.01
Financial Statements and Exhibits
Exhibits
Financial statements, pro forma financial information, and exhibit attachments filed with this report.
Key Figures
Enterprise value of Sterno food service sale: $292.5 million
Sterno food service Adjusted EBITDA: $30.330 million
Rimports Adjusted EBITDA: $28.076 million
+5 more
8 metrics
Enterprise value of Sterno food service sale
$292.5 million
Agreed transaction value for Sterno’s food service business
Sterno food service Adjusted EBITDA
$30.330 million
Subsidiary Adjusted EBITDA for year ended December 31, 2025
Rimports Adjusted EBITDA
$28.076 million
Adjusted EBITDA for Rimports in 2025
Total Sterno Group Adjusted EBITDA
$58.406 million
Combined 2025 Adjusted EBITDA for Sterno Group
Planned senior secured net leverage ratio
Below 1.0x
Expected ratio after applying sale proceeds to debt repayment
Outside Date for merger agreement
May 26, 2026
Date after which either party may terminate if not closed
Excess leverage fee milestone date
June 30, 2026
Date after which CODI expects to avoid excess leverage fees
CODI ownership of Sterno
Approximately 92%
Ownership of Sterno stock on a fully diluted basis
Key Terms
enterprise value, Adjusted EBITDA, senior secured net leverage ratio, Outside Date, +1 more
5 terms
enterprise value financial
"Archer will acquire Sterno’s food service business for an enterprise value of $292.5 million"
Enterprise value is the total worth of a company, reflecting what it would cost to buy the entire business. It includes the company's market value plus any debts, minus its cash holdings, offering a comprehensive picture of its true value. Investors use it to compare companies regardless of their capital structures, helping them assess how much they would need to pay to acquire the business.
Adjusted EBITDA financial
"In 2025, the business to be sold generated subsidiary adjusted EBITDA of approximately $30.3 million"
Adjusted EBITDA is a way companies measure how much money they make from their core operations, like running a business, by removing certain costs or income that aren’t part of regular business activities. It helps investors see how well a company is doing without distractions from unusual expenses or gains, making it easier to compare companies or track performance over time.
senior secured net leverage ratio financial
"CODI expects its senior secured net leverage ratio to fall below 1.0x"
A senior secured net leverage ratio measures how much a company owes on its highest-priority, collateral-backed debt compared with its core annual cash earnings; it’s calculated by taking net senior secured debt (senior secured borrowings minus cash) divided by annual operating cash profit before interest and taxes. Investors use it to gauge the company’s ability to cover its most protected debts and to compare financial risk across firms — like comparing a household’s mortgage balance to its yearly take-home pay to see how comfortably it can be paid down.
Outside Date regulatory
"the right of either Parent or Sterno to terminate the Agreement after May 26, 2026 (the “Outside Date”)"
An outside date is the final contractual deadline by which a planned deal—such as a merger, acquisition, or financing—must be completed; if the transaction hasn’t closed by that date, parties typically gain the right to walk away or trigger agreed remedies. It matters to investors because it sets a clear timetable for when uncertainty should end, and approaching or missing the outside date can raise the chance of deal failure, renegotiation, or changes to valuation.
excess parachute payment financial
"any “excess parachute payment” under Section 280G of the Internal Revenue Code"
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 28, 2026
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||||||||||||
COMPASS GROUP DIVERSIFIED HOLDINGS LLC
(Exact name of registrant as specified in its charter)
| Delaware | 001-34926 | 20-3812051 | ||||||||||||
| (State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||||||||||||
(Address of principal executive offices and zip code)
Registrant’s telephone number, including area code: (203 ) 221-1703
Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | ||||||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
| Emerging growth company | |||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Section 1 Registrant's Business and Operations
Item 1.01 Entry into a Material Definitive Agreement
Compass Group Diversified Holdings LLC (the “Company”) and Compass Diversified Holdings (“Holdings” and, together with the Company, collectively “CODI,” “we,” “us” or “our”) acquires and manages small to middle market businesses in the ordinary course of business. The following description relates to the recent divestiture of one such business.
Sterno’s Food Service Business
On March 28, 2026, the Company, in its capacity as the representative (the “Stockholder Representative”) of the holders (the “Stockholders”) of common stock of SternoCandleLamp Holdings, Inc. (“Sterno”), a majority owned subsidiary of the Company, and for the limited purposes of the Rimports Distribution (as defined below), entered into a definitive Agreement and Plan of Merger (the “Agreement”) with WCHG Buyer, Inc. (“Parent”), WCHG Heat Merger Sub, Inc. (“Merger Sub”) and Sterno, pursuant to which (i) Parent will acquire all of the issued and outstanding equity securities of Sterno (which is the parent company for both a food service business and home fragrance business) through the merger of Merger Sub with and into Sterno, with Sterno surviving the merger and becoming a wholly owned subsidiary of Parent (the “Merger”), and (ii) on the day immediately prior to the closing of the Merger, Sterno will cause the distribution of all the limited liability company interests of its indirect wholly owned subsidiary Rimports, LLC (“Rimports”), which is the holding company of Sterno’s home fragrance business, to the Stockholders (the “Rimports Distribution”), and Rimports will remain a majority owned subsidiary of CODI. The sale price of Sterno will be based on an enterprise value of $292.5 million and will be subject to certain adjustments based on matters such as transaction expenses, change-of-control payments, and the net working capital, cash and debt balances of Sterno and its subsidiaries (excluding Rimports and its subsidiaries) (the “Target Companies”) at the time of the closing. The Company owns approximately 92% of the outstanding stock of Sterno on a fully diluted basis. The proceeds received by the Company will be used to pay down outstanding debt under the Company’s senior credit facility.
The Agreement contains customary representations, warranties and covenants. The obligations of each party to consummate the transactions contemplated by the Agreement are subject to the following conditions: (i) the expiration or termination of all applicable waiting periods and the receipt of any required approvals under applicable laws relating to antitrust or competition, (ii) there will be no order, judgment, injunction, etc., restraining or prohibiting, or pending proceeding challenging or seeking to restrain or prohibit, the consummation of the transactions contemplated by the Agreement, and (iii) the adoption of the Agreement by a majority of the voting power of the outstanding stock of Sterno entitled to vote thereon. Parent and Merger Sub’s obligations to consummate the transactions contemplated by the Agreement are subject to certain other conditions, including, but not limited to, (a) subject to certain exceptions, the accuracy of the representations and warranties of Sterno, (b) performance in all material respects by the Target Companies of the covenants required by the Agreement, (c) no material adverse effect will have occurred with respect to the Target Companies prior to closing, (d) any “excess parachute payment” under Section 280G of the Internal Revenue Code with respect to any employee of Sterno will have been either approved by the Stockholders or waived by the persons who would otherwise be entitled to such payments, and (e) the Rimports Distribution will have been completed in form and substance reasonably acceptable to Parent. Sterno’s obligations to consummate the transactions contemplated by the Agreement are also subject to certain other conditions, including, but not limited to, (x) subject to certain exceptions, the accuracy of the representations and warranties of Parent, (y) performance in all material respects by Parent of the covenants required by the Agreement, and (z) the effectiveness of certain transition services agreement between Rimports and The Sterno Group Companies, LLC, a Target Company and wholly owned subsidiary of Sterno.
The Agreement also contains certain rights to terminate the agreement, including the right of either Parent or Sterno to terminate the Agreement after May 26, 2026 (the “Outside Date”), if the transactions contemplated by the Agreement have not been consummated by such date, subject to certain exceptions, including the right of either party to extend the Outside Date for a period of up to 59 days under certain circumstances.
The sale is expected to close in the second quarter of 2026. However, there can be no assurances that all of the conditions to closing will be satisfied.
The foregoing brief description of the Agreement is not meant to be exhaustive and is qualified in its entirety by the Agreement itself, which is attached hereto as Exhibit 2.1 to this Current Report on Form 8-K.
Section 8 Other Events
Item 8.01 Other Events
On March 30, 2026, CODI issued a Press Release announcing the sale of Sterno’s food service business. The foregoing description of the Press Release is qualified in its entirety by reference to the complete text of the Press Release furnished as Exhibit 99.1 hereto, which is hereby incorporated by reference herein.
Forward Looking Statements
This Current Report on Form 8-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including, without limitation, expectations with respect to the sale of Sterno’s food service business. Such forward-looking statements may be identified by, among other things, the use of forward-looking terminology such as “believe,” “expect,” “may,” “could,” “would,” “plan,” “intend,” “estimate,” “predict,” “future,” “potential,” “continue,” “should” or “anticipate” or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. These statements are based on beliefs and assumptions by management, and on information currently available to management. These statements involve risk and uncertainties that could cause actual results and outcomes to differ, perhaps materially, including, but not limited to: the risk that the sale of Sterno’s food service business may not be completed in a timely manner or at all; risks associated with the disposition of Sterno’s food service business generally, such as the inability to obtain, delays in obtaining, or the imposition of burdensome conditions imposed in connection with obtaining regulatory approval and the occurrence of any event, change or other circumstances that could give rise to the termination of the definitive agreement entered into for the disposition of Sterno’s food service business; the risks to the Company’s financial condition associated with the fees that will be incurred under its senior credit facility if leverage is not reduced, with proceeds from the sale of Sterno’s food service business or otherwise, prior to the milestone dates set forth in the senior credit facility; and the effect of the announcement or pendency of the Merger on Sterno’s or Rimport’s business relationships, performance, and business generally. Please see CODI’s Annual Report on Form 10-K for the year ended December 31, 2025 filed with the Securities and Exchange Commission (the “SEC”) on February 27, 2026 for other risk factors that you should consider in connection with such forward-looking statements. Investors are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date such statements have been made. Except as required by law, CODI undertakes no public obligation to update any forward-looking statements to reflect events, circumstances, or new information after the date of this Current Report on Form 8-K, or to reflect the occurrence of unanticipated events.
Section 9 Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits
(d) Exhibits.
| Exhibit Number | Description | |||||||
| 2.1 | Agreement and Plan of Merger, dated March 28, 2026, by and among (i) SternoCandleLamp Holdings, Inc., (ii) WCHG Buyer, Inc., (iii) WCHG Heat Merger Sub, Inc., and (iv) Compass Group Diversified Holdings LLC, as the Stockholder Representative and for the limited purposes of Section 6.20 therein.* | |||||||
| 99.1 | Press Release dated March 30, 2026 announcing the sale of Sterno's food service business. | |||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |||||||
* Schedules and similar attachments have been omitted in reliance on Instruction 4 of Item 1.01 of Form 8-K and Item 601(a)(5) of Regulation S-K. The registrant will provide, on a supplemental basis, a copy of any omitted schedule or attachment to the SEC or its staff upon request.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: March 30, 2026 | COMPASS DIVERSIFIED HOLDINGS | ||||||||||
| By: | /s/ Stephen Keller | ||||||||||
| Stephen Keller | |||||||||||
| Regular Trustee | |||||||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: March 30, 2026 | COMPASS GROUP DIVERSIFIED HOLDINGS LLC | ||||||||||
| By: | /s/ Stephen Keller | ||||||||||
| Stephen Keller | |||||||||||
| Chief Financial Officer | |||||||||||
Exhibit 99.1
Compass Diversified Announces Definitive Agreement to Sell Sterno’s Food Service Business for $292.5 Million and Accelerate Deleveraging
WESTPORT, Conn., March 30, 2026 (GLOBE NEWSWIRE) -- Compass Diversified (NYSE: CODI) (“CODI” or the “Company”), an owner of leading middle-market businesses, today announced that it has entered into a definitive agreement to sell the food service business of its majority-owned subsidiary, SternoCandleLamp Holdings, Inc. (“Sterno”), to Archer Foodservice Partners (“Archer”), a leading provider of foodservice consumables and parent entity of companies Handgards, Inno-Pak, and Fineline Settings, and a portfolio company of Wynnchurch Capital, L.P. (“Wynnchurch”).
Under the terms of the agreement, Archer will acquire Sterno’s food service business for an enterprise value of $292.5 million, subject to customary working capital and other adjustments. In 2025, the business to be sold generated subsidiary adjusted EBITDA of approximately $30.3 million. This figure includes certain shared overhead expenses that will remain following the transaction.
The Company will use the net proceeds from the transaction to repay outstanding debt. Following the closing of the transaction and the anticipated repayment of senior secured indebtedness, CODI expects its senior secured net leverage ratio to fall below 1.0x. Following the anticipated repayment, CODI also expects to avoid fees associated with excess leverage under its senior secured indebtedness beyond June 30, 2026.
Following the transaction, CODI will retain Sterno’s home fragrance business, which will continue to operate under the Rimports name. Headquartered in Provo, Utah, Rimports is a leading manufacturer and distributor of branded and private-label home fragrance products.
“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,” said Elias Sabo, Chief Executive Officer of Compass Diversified. “Sterno has been a valuable part of CODI for more than a decade, and this agreement reflects the quality of the business the team has built. We thank Sterno’s employees for their hard work and dedication, and we believe the business is well positioned for continued success in its next chapter.”
Geoffrey J. Feil, Chief Executive Officer of Sterno, added, “It has been a great privilege to lead the Sterno business. With a brand whose roots date back over 125 years, Sterno has a rich history as the most reliable source of portable heat and the clear choice for chefs, caterers, home entertainers, campers, and even those serving our country overseas during World Wars I and II. The business is stronger than ever and well-positioned for continued success. I am grateful to all of the employees for their hard work and dedication to the business. While I will miss leading Sterno, I am also excited to continue to partner with Compass Diversified and to turn my full attention to building a leader in the home fragrance and décor space with Rimports.”
The transaction is subject to customary closing conditions, including applicable regulatory approvals, and is expected to close in May 2026.
Raymond James is serving as financial advisor to CODI, and Brownstein Hyatt Farber Schreck, LLP is serving as legal counsel.
About Compass Diversified (“CODI”)
CODI leverages its permanent capital base and long-term disciplined approach, maintaining controlling ownership interests in each of its subsidiaries and maximizing its ability to impact long-term cash flow generation and value creation. The Company provides both debt and equity capital for its subsidiaries, contributing to their financial and operating flexibility. CODI utilizes the cash flows generated by its subsidiaries to invest in the long-term growth of the Company and seeks to generate strong returns through its culture of transparency, alignment and accountability.
Forward Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including without limitation, expectations with respect to the sale of Sterno. Such forward-looking statements may be identified by, among other things, the use of forward-looking terminology such as “believe,” “expect,” “may,” “could,” “would,” “plan,” “intend,” “estimate,” “predict,” “future,” “potential,” “continue,” “should” or “anticipate” or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. These statements are based on beliefs and assumptions by management, and on information currently available to management. These statements involve risk and uncertainties that could cause actual results and outcomes to differ, perhaps materially, including but not limited to: the risk that the sale of Sterno may not be completed in a timely manner or at all; risks associated with the disposition of Sterno generally, such as the inability to obtain, delays in obtaining, or the imposition of burdensome conditions imposed in connection with obtaining regulatory approval and the occurrence of any event, change or other circumstances that could give rise to the termination of the definitive agreement entered into for the disposition of Sterno; the risks to the Company’s financial condition associated with the fees that will be incurred under its senior credit facility if leverage is not reduced prior to the milestone dates set forth in the senior credit facility; and the effect of the announcement or pendency of the sale on Sterno’s or Rimport’s business relationships, performance, and business generally. . Please see CODI’s Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on February 27, 2026 for other risk factors that you should consider in connection with such forward-looking statements. Investors are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date such statements have been made. Except as required by law, CODI undertakes no public obligation to update any forward-looking statements to reflect events, circumstances, or new information after the date of this press release, or to reflect the occurrence of unanticipated events.
Investor Relations
Compass Diversified
irinquiry@compassdiversified.com
Net Income (Loss) from Continuing Operations to Non-GAAP Consolidated Adjusted EBITDA Reconciliation
(Unaudited)
| Year ended December 31, 2025 | ||||||||||||||||||||
| (in thousands) | Sterno Food Service | Rimports | Sterno Group | |||||||||||||||||
| Net income from continuing operations | $ | 11,341 | $ | 15,542 | $ | 26,883 | ||||||||||||||
| Adjusted for: | ||||||||||||||||||||
| Provision (benefit) for income taxes | 7,766 | 54 | 7,820 | |||||||||||||||||
| Interest expense, net | — | — | — | |||||||||||||||||
| Intercompany interest | 8,238 | — | 8,238 | |||||||||||||||||
| Depreciation and amortization | 1,797 | 12,522 | 14,319 | |||||||||||||||||
| EBITDA | 29,142 | 28,118 | 57,260 | |||||||||||||||||
| Other (income) expense | 30 | (433) | (403) | |||||||||||||||||
| Non-controlling shareholder compensation | 1,158 | — | 1,158 | |||||||||||||||||
| Other | — | 391 | 391 | |||||||||||||||||
| Adjusted EBITDA | $ | 30,330 | $ | 28,076 | $ | 58,406 | ||||||||||||||
FAQ
What transaction did Compass Diversified (CODI) announce involving Sterno’s food service business?
Compass Diversified agreed to sell Sterno’s food service business to Archer Foodservice Partners for an enterprise value of $292.5 million. The deal includes customary working capital and other adjustments and is structured through a merger with a buyer subsidiary controlled by Archer’s parent entity.
How will Compass Diversified (CODI) use the proceeds from the Sterno food service sale?
CODI plans to use net proceeds from the $292.5 million Sterno food service sale to repay outstanding debt. After this repayment and expected senior secured indebtedness reduction, CODI anticipates its senior secured net leverage ratio will fall below 1.0x, improving its balance sheet.
How did Sterno’s food service business perform financially before the sale agreement?
In 2025, the Sterno food service business generated subsidiary Adjusted EBITDA of approximately $30.3 million. This Adjusted EBITDA figure includes certain shared overhead expenses that will continue to exist after the transaction, indicating the business being sold is a meaningful contributor to CODI’s portfolio earnings.
What impact will the transaction have on Compass Diversified’s leverage and fees?
Following the sale and anticipated repayment of senior secured indebtedness, CODI expects its senior secured net leverage ratio to be below 1.0x. Management also expects to avoid fees associated with excess leverage under its senior secured indebtedness beyond June 30, 2026, improving financing costs.
Will Compass Diversified (CODI) retain any part of Sterno after the transaction closes?
Yes. CODI will retain Sterno’s home fragrance business, which will continue operating under the Rimports name. Rimports, headquartered in Provo, Utah, is described as a leading manufacturer and distributor of branded and private-label home fragrance products within CODI’s portfolio.
When is the Sterno food service transaction expected to close for Compass Diversified?
The definitive agreement includes customary regulatory and closing conditions. CODI states that the transaction is expected to close in May 2026, and the related 8-K notes an anticipated closing in the second quarter of 2026, though completion cannot be guaranteed.
How much of Sterno does Compass Diversified own and what structure is used for the sale?
Compass Diversified owns approximately 92% of Sterno’s outstanding stock on a fully diluted basis. The sale uses a merger structure where a buyer subsidiary merges into Sterno, with Sterno surviving as a wholly owned subsidiary of the buyer’s parent following closing.
Filing Exhibits & Attachments
6 documentsPress Releases
Compass Diversified