SYRACUSE, N.Y. -- Penn Traffic Co. here said last week it plans to sell its Sani-Dairy division to Dean Foods Co., Franklin Park, Ill., for $37.5 million in cash.
said once the transaction has been completed it would begin a 10-year supply agreement with Dean Foods for purchases of products currently supplied by Sani-Dairy and two other dairies. Sani-Dairy is expected to have revenues of approximately $65 million (primarily intercompany sales) for the fiscal year ending Jan. 31, 1998.
Penn Traffic expects to record a gain of approximately $25 million (pretax) upon the completion of the transaction, and the company expects that the divestiture of the Sani-Dairy division would be accretive to its future earnings.
Proceeds from the sale, which is subject to regulatory approvals, would be used to reduce indebtedness and for general corporate purposes.