Blackstone, Wellspring in $1.3bn food distribution deal

The Blackstone Group and Wellspring Capital Management will merge Performance Food Group with their portfolio company Vistar Food.

The Blackstone Group and New York firm Wellspring Capital Management have agreed to take NASDAQ-listed Performance Food Group private for $1.3 billion (€888 million). The purchase price of $34.50 per share in cash represents a premium of 42.6 percent over yesterday’s closing share price of $24.19.

Performance Food Group distributes food products to hotels, schools, healthcare facilities and restaurants, including Cracker Barrel, TGI Friday’s, Outback Steakhouse and Ruby Tuesday. The deal will be structured as a merger with Vistar Food Corporation, which is controlled by Wellspring and Blackstone. Vistar is the largest distributor of candy and chips to vending machine operators in the US, and also has a food services arm, Roma Food Enterprises, whose clients include Santoro’s Brick Oven Pizza, Noodles & Co. and Little Caesars.

Wellspring formed Vistar from the distribution arm of Minnesota-based Multifoods International Corp in 2002, which it acquired for $166 million. Blackstone invested $421 million for a stake in Vistar in July 2007.

“We are excited about the combination of Performance Food Group and Vistar, as it brings together two of the strongest companies and many of the best brands in the foodservice distribution industry,” Wellspring partner William Dawson said in a statement.

The deal is not subject to any financing condition, and is expected to close by the second quarter of 2008. The agreement includes a $40 million breakup fee.

Evercore Group provided financial advice to Performance Food Group, while Bass, Berry & Sims provided legal advice. Wachovia, Goldman Sahcs and Credit Suisse are financial advisors to Blackstone and Wellspring. Simpson Thacher & Bartlett is legal advisor for the private equity firms.