FRANKLIN PARK, Ill. -- Dean Foods Co. here and Agrilink Foods Inc., Rochester, N.Y., have reached a definitive agreement by which Agrilink would acquire Dean's vegetable operations, which include the frozen Birds Eye brand.
The price would be approximately $400 million in cash plus Agrilink's aseptic foods business, which would be folded into Dean's Specialty business segment. The transaction, subject to regulatory approval, is expected to close by the end of September.
"The sale of our vegetable operations reflects our strategic decision to concentrate shareholder resources to further expand Dean's three core businesses -- dairy, pickle and specialty foods," said Howard M. Dean, chairman and chief executive officer.
"The aseptic business that we are acquiring has $100 million in sales and is located in Benton Harbor, Mich. It will be an excellent addition to our existing aseptic business," Dean continued.
Agrilink Foods, formerly known as Curtice Burns Foods, processes and markets a variety of regional branded, private-label and food-service products in facilities throughout the United States. Agrilink is a wholly owned subsidiary of Pro-Fac Cooperative, an agricultural marketing cooperative with more than 600 members. The cooperative processes fruits, vegetables and popcorn through Agrilink Foods.
"This acquisition is clearly in line with our strategic direction," said Dennis M. Mullen, president and chief executive officer of Agrilink.
Dean Foods Vegetable Co., which also produces the canned Freshlike and VegAll brands, reported fiscal 1998 revenues of $553 million, or 17% of Dean Foods' consolidated sales of $3.3 billion, and operating earnings of $39.6 million, or 19% of the company's consolidated earnings of $202.1 million, according to a company news release. Days before the sale was announced, Dean Foods Co. increased its quarterly dividend by 5%.
The company is also the largest supplier of frozen private-label foods, according to The Food Institute Report, published by the American Institute of Food Distribution, Fair Lawn, N.J.
Dean further stated in a news release that the company -- the nation's leading dairy processor and distributor -- would use the proceeds of the sale to acquire new dairies in strategic geographic areas, improve efficiencies in its existing dairies through cost reduction and consolidation, and add volume through the introduction of new products.
Dean also expects to make the most of other acquisition opportunities as they arise, in the pickles and specialty foods segments, the company said.
