As Counselor reported last week, Top 40 supplier Lanco (asi/66224) has entered an agreement to be acquired by NC Chocolate Manufacturing, an affiliate of Nassau Candy, which is the parent company of Chocolate Inn/Taylor & Grant (asi/44900). Lanco will continue operations and plans to maintain current employee levels under a deal through which the assets of the Ronkonkoma, NY-based firm would be purchased by Nassau Candy. Lanco president Scott Slade talked to Counselor this week about how the company got to this point and what comes next. 

“It will effectively be a new company post-purchase,” Slade said, in an interview this week. “I’m looking forward to Nassau Candy taking the Lanco brand to new levels.” 

On November 3, Lanco filed a Workers Adjustment & Retraining Notice with the New York State Department of Labor that said it would be closing its facility and laying off workers by December 1. The filing was one component of what principals at Nassau Candy say is a debt restructuring process that Lanco is going through after having fallen on hard times. As the WARN filing indicated, economic reasons were driving the company to explore new financing options. 

Slade says the main factor in the company’s well-known financial struggles was the large cost of moving facilities in 2015. Originally housed in Hauppauge, NY, Slade says Lanco was forced to relocate to a 70,000-square-foot facility in Ronkonkoma, NY, after its previous building was sold and the new owner decided to use it for himself. 

“We planned as best we could, but there were definitely unforeseen things that happened,” Slade said. “There is a lot of infrastructure that had to move to the new facility and we had to make sure we complied with all the government regulations. You know, dealing with hand sanitizer involves alcohol so we had to hazmat-fireproof a room. We went over budget.”

Because of the high cost of doing business in New York, Slade considered moving the company outside the state. But staying in the Northeast corridor provided a geographical advantage, Slade says, as promotional food products sell well in the region. In an effort to minimize any disruptions to business, Lanco simultaneously ran two facilities during the transition. 

As the expenses piled up, Slade sought out merger and acquisition options – Nassau Candy was the top choice. “They’re excellent at process management and efficiencies,” Slade said. “The resources they have available to them are significantly greater than what we have.”

Nassau Candy principal Lance Stier said that under the purchase agreement, which could be finalized within the next 60 days, the current Lanco facility will stay open and the approximately 130 employees will continue serving the promotional products industry. Lanco will continue to go to market under its name and its products are back up live on ESP. In the interim, NC Credit Co., an affiliate of Nassau Candy, will be providing financing to the company.

Slade plans to stay on board and work for Nassau Candy. “I want to make this a positive transition for our customers,” he said. “We want to make sure we provide them with everything on our Lanco Star: restocked inventory, customer service, on-time delivery, competitive pricing and quality, innovative products.”

Counselor ranks Lanco as the industry’s 30th largest supplier, estimating the firm had 2016 sales of $55.7 million.