Pinnacle Foods has signed a definitive agreement to acquire Birds Eye Foods from a holding company controlled by Vestar Capital Partners, Pro-Fac Cooperative and Birds Eye management in a transaction valued at USD1.3bn.
Birds Eye Foods owns consumer brands in frozen vegetables and meals such as Birds Eye, Birds Eye Steamfresh, and Birds Eye Voila!, as well as shelf-stable brands including Comstock and Wilderness pie fillings and toppings, Nalley and Brooks chilli and chilli ingredients, and snacks from Tim’s Cascade Snacks, Snyder of Berlin and Husman.
Pinnacle Foods, owned by private equity funds controlled by The Blackstone Group, manufactures and distributes branded packaged foods that can be found in 80 per cent of US households.
The company’s portfolio holds the number-one or number-two position in eight of 11 categories in which it competes, and includes well-known brands such as Duncan Hines baking mixes and frostings, Vlasic pickles, peppers and relish, Mrs. Butterworth’s and Log Cabin syrups, Armour canned meats, Swanson and Hungry-Man frozen dinners and entrees, Van de Kamp’s and Mrs. Paul’s frozen seafood, Aunt Jemima frozen breakfast, Lender’s bagels and Celeste frozen pizza.
“We are excited about bringing Birds Eye Foods into the Pinnacle Foods family of brands. The Birds Eye brand has USD640m in net sales in the US and strong health and nutrition credentials, along with proven extendibility into new segments and occasions. The transaction provides meaningful opportunities to create value and strengthens our financial position,” says Pinnacle Foods chief executive Bob Gamgort. “This compelling combination creates a leader in both the frozen and shelf stable business segments and enables us to better serve our consumers and customers.”
”We are excited to support Bob Gamgort and the Pinnacle Foods management team in expanding the business through this acquisition. Birds Eye adds another market-leading brand to the Pinnacle Foods platform and creates an attractive, diversified food company with significant scale,” says Prakash Melwani, senior managing director of The Blackstone Group. “We look forward to continuing our support of Pinnacle Foods as it grows organically and via acquisitions.”
Pinnacle Foods expects to fund the transaction using a combination of new debt financing at the company and a significant new equity contribution from Blackstone. The transaction will reduce leverage multiples at Pinnacle Foods. The closing of the transaction, which is expected to occur no later than the first quarter of 2010, is subject to customary conditions, including regulatory approvals.
Debt financing in support of the acquisition will be comprised of senior secured credit facilities and senior unsecured bonds. The financing will be provided by Barclays Capital, Credit Suisse, BofA Merrill Lynch, HSBC, and Macquarie Capital.
