Hicks Muse in $350m food co deal

The Dallas private equity firm has agreed to acquire Wisconsin-based Sturm Foods from Midwest middle market firm Mason Wells.

Dallas-based private equity firm Hicks, Muse, Tate & Furst has agreed to buy Wisconsin’s Sturm Foods from Midwest-based middle market firm Mason Wells for $350 million (€270 million).

Sturm manufactures private-label drink mixes, hot cereals and other dry mix products for the retail and foodservices sectors. The company was founded in 1905 and run as a family-owned business until 1999, when it was sold to Milwaukee-based Mason Wells, which manages a $175 million buyout fund.

According to Hicks Muse partner Andrew Rosen, the firm had been aware of Sturm for a long time, as Hicks Muse is a long-term food investor. “Toward the late ‘90s and early 2000, we looked at opportunities within store brands, and we’ve been evaluating various ways in which we can invest capital in them.”

Hicks Muse plans to use Sturm as a platform in a buy-and-build strategy. The company will also continue to grow organically. Under the management of Mason Wells, for example, Sturm introduced a number of nutritional products such as sugar-free instant oat meal and sugar-free drink mix.

Deutsche Bank Securities acted as financial advisor to Hicks Muse.

Founded in 1989, Hick Muse manages more than $11 billion in capital. In March, the firm distributed a $150 million (€113 million ) dividend from Colorado-based meat processor Swift to its investors. Swift was created in 2002 when Hicks Muse and Booth Creek Management acquired a majority stake in the beef and pork processing division of ConAgra Foods. The firm solidified control in 2004 when they bought out the balance of ConAgra’s interest in the business.

Hicks Muse’s Fund V closed in 2002 on $1.6 billion.