The Blackstone Group will further consolidate the US frozen food industry – and keep its buyout market momentum moving – with a $1.3 billion deal for Birds Eye Foods.
For vendor Vestar Capital Partners, the deal represents a healthy trade sale exit at the end of a dual-track process (a planned public listing has been pulled). Vestar gained control of Birds Eye via a $175 million investment made in 2002.
Best known for its frozen foods lines, Birds Eye will be rolled into Blackstone portfolio company Pinnacle Foods, parent of brands including Vlasic pickles, Mrs. Butterworth's syrups, Swanson and Hungry-Man frozen dinners and entrees, Celeste frozen pizzas and Van de Kamp's and Mrs. Paul's frozen seafood.
“Birds Eye adds another market-leading brand to the Pinnacle Foods platform and creates an attractive, diversified food company with significant scale,” Prakash Melwani, Blackstone senior managing director, said in a statement. “We look forward to continuing our support of Pinnacle Foods as it grows organically and via acquisitions.”
Birds Eye: On Blackstone's table
Expected to complete in the first quarter of 2010, the deal is being funded by senior secured credit facilities and senior unsecured bonds, according to a statement which did not disclose further financial details. The Lenders are Barclays Capital, Credit Suisse, BofA Merrill Lynch, HSBC and Macquarie Capital.
Blackstone had reportedly been in the running for some non-US operations of Birds Eye during a 2006 auction for a Unilever frozen food division encompassing numerous brands and country operations. The firm was said to be mulling a partnership with CapVest Private Equity to purchase the division, which ultimately sold to Permira for £1.15 billion.
Blackstone purchased Pinnacle at the height of the credit boom in March 2007, paying about $1.2 billion in equity while assuming $900 million of debt.
While its large US private equity activity was at a standstill during the first part of the year, Blackstone has been gradually picking up the pace since May, when it joined with The Carlyle Group, Centerbridge Partners, WL Ross and The Wellcome Trust on the $900 million rescue of failed Florida-based bank BankUnited. In September it agreed to invest $780 million in building materials firm Summit Metals, alongside Silverhawk Capital and former BHP Billiton CEO Charles ‘Chip’ Goodyear. And in October it said it would provide a $1 billion equity cheque for the $2.7 billion buyout of Busch Entertainment and its 10 US theme parks.