In the News
Blackstone to Buy Birds Eye Foods for $1.3 Billion (Update2)
By Andrew Dunn
NEW YORK (Bloomberg.com)
Nov. 19 (Bloomberg) -- Blackstone Group LP’s Pinnacle Foods Group LLC agreed to buy Birds Eye Foods Inc., the largest U.S. frozen-vegetable company, for $1.3 billion, adding to its Duncan Hines and Swanson food brands as the pace of buyouts increases.
The transaction should close by the first quarter of next year, Pinnacle said today in a statement. The deal will be funded with new debt financing at the company and an equity contribution from New York-based Blackstone, the world’s biggest private-equity company.
The Birds Eye purchase is the seventh-largest U.S. private equity deal of 2009 and Blackstone’s second-biggest of the year, after its planned acquisition of Anheuser-Busch InBev NV’s theme-park business for as much as $2.7 billion, according to data compiled by Bloomberg. Rochester, New York-based Birds Eye has annual sales of more than $930 million and says it holds a 27 percent share of the U.S. market for frozen vegetables.
“Companies can only grow so much through organic growth,” said Paul Schaye, managing partner of Chestnut Hill Partners, a New York-based firm that helps buyout firms identify targets. “Private equity has always been opportunistic and here was a chance to do some strategic growth.”
Schaye said his firm is expanding its practice dedicated to finding so-called bolt-on acquisitions for private-equity clients. Chestnut Hill recently hired Ryan Jon Orner from Merrill Lynch & Co. to focus on those types of deals.
Coming Back
Buyouts are coming back from a two-year drought. Through yesterday, the Standard & Poor’s 500 Index rallied 64 percent from its March 9 low, and loan prices as measured by the S&P/LSTA U.S. Leveraged Loan 100 Index gained a record 46 percent this year.
Blackstone fell 27 cents, or 1.7 percent, to $15.28 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have more than doubled this year.
Birds Eye is currently owned by Pro-Fac Cooperate Inc., a New York agricultural cooperative; funds affiliated with Vestar Capital Partners, a New York-based buyout firm; and Birds Eye management.
They bought the company about seven years ago and increased spending on marketing, research and development, and new products, Brian Ratzan, a Vestar managing director, said in a telephone interview today.
IPO Filing
“This is a well-known, extendable brand and the company has only begun to take advantage of that brand,” he said. Birds Eye filed last month for an initial public offering, a move that sparked interest from buyers, Ratzan said.
In the fiscal year ended June 27, the company recorded net income of $53.6 million on sales of $935.6 million, according to the IPO filing. The company had total long-term debt of $706.8 million, the filing showed.
Debt financing for the purchase will consist of senior secured credit facilities and senior unsecured bonds, according to today’s statement. Barclays Capital, Credit Suisse Group AG, Bank of America Merrill Lynch, HSBC Holdings Plc and Macquarie Capital will arrange the financing.
Pinnacle is being advised by Blackstone, Barclays Capital, Bank of America Merrill Lynch and Credit Suisse. Simpson Thacher & Bartlett LLP is providing legal counsel. Centerview Partners and JP Morgan are advising Birds Eye, as is law firm Kirkland & Ellis LLP.