20Nov2009
Pinnacle to Buy Birds Eye for $1.3 Billion
Pinnacle Foods Group, Mountain Lakes, N.J., said on Nov. 19 that it has inked a deal to acquire Rochester, N.Y.-based Birds Eye Foods for $1.3 billion. The transaction is expected to be completed by the end of the first quarter of 2010 and might even happen by the end of the year.
In October, Birds Eye filed for an initial public offering in an effort to raise up to $350 million – a move that sparked interest from buyers, according to market observers. The IPO filing showed that in the fiscal year ended June 27, Birds Eye had net income of $53.6 million on sales of $935.6 million, according to a report by Bloomberg.com. That report said Birds Eye had long-term debt of $706.8 million. Sales from the Birds Eye brand alone in the U.S. were pegged at $640 million by one source
The largest frozen vegetable company in the U.S., with a reported 27% share of the category, it is owned by a holding company controlled by Vestar Capital Partners, Pro-Fac Cooperative and Birds Eye management.
“Birds Eye Foods has been a highly successful invesetment for Vestar Capital Partners and its investors,” said Brian K. Ratzan, managing director, Vestar. “The company has grown significantly in the past few years and today, Birds Eye Foods is an exciting business with innovative products and tremendous potential. Pinnacle Foods is a great place for the Birds Eye brand. It will have the resources of a larger food company platform as it expands its leadership position.”
The company’s frozen vegetable and meal brands include Birds Eye, Birds Eye Steamfresh and Birds Eye Voila!, and its shelf stable brands include Comstock and Wilderness pie fillings and toppings, Nalley and Brooks chili and chili ingredients, and snacks from Tim’s Cascade Snacks, Snyder of Berlin and Husman.
Pinnacle is owned by private equity funds controlled by The Blackstone Group, New York, the world’s biggest private-equity company. Pinnacle 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.
Pinnacle manufactures and distributes iconic, branded packaged foods that can be found in 80% of U.S. households. Its diversified portfolio holds the No. 1 or No. 2 position in eight of the 11 categories in which it competes, and includes 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 breakfasts; Lender’s bagels; and Celeste frozen pizza.
