Pinnacle Foods to buy Unilever's Wish-Bone salad dressing business for $580 mn
13 Aug 2013
US packaged foods company Pinnacle Foods is buying Anglo-Dutch consumer goods giant Unilever Plc's Wish-Bone salad dressings business for $580 million in cash.
Pinnacle, majority owned by private equity firm Blackstone Group, said that it will fund the deal with cash at hand and new debt.
In June 2012, Unilever said it would restructure its business by selling some of its brands and businesses that is not core to its portfolio, and later sold its PF Chang's and Bertolli frozen meals businesses to ConAgra Foods for $265 million and its global Skippy peanut butter brand in the US and Canada to Hormel Foods earlier this year for $700 million.
In June this year hired Goldman Sachs to find a buyer for its Wish-Bone salad-dressing business. (See: Unilever seeks to sell Wish-Bone salad-dressing business: report)
In 1945, Phillip Sollomi opened a family-style restaurant in Kansas City, Missouri and named it `The Wish-Bone.' Since chicken was the specialty of the restaurant, he introduced his family recipe for Italian salad dressing from Sicily, which became a hit and was called `The Kansas City Wish-Bone Famous Italian-Style Dressing.'
The restaurant's customers loved the family recipe and started taking bottles of the dressing home, and Phillip later began selling it to local grocers at a ten-cent premium to other salad dressing brands.
The brand was acquired in 1958 by Lipton, now a Unilever subsidiary, which, through clever marketing, made it the No1 brand in Italian dressing in the US.
Today, the Wish-Bone business has around 20 different brands of dressings, Dry Dressing & Seasoning Mix and Marinades. Combined annual sales of the brands being acquired are approximately $190 million.
Commenting on the acquisition, Pinnacle Foods CEO, Bob Gamgort said, "The acquisition of Wish-Bone is a perfect fit with our successful strategy of 'Reinvigorating Iconic Brands.' In addition to enabling significant cost synergies and tax benefits, the transaction enhances our ability to offer consumers meal solutions and recipe ideas across our broad portfolio of brands. We are excited to apply our innovation capabilities to this great brand."
Kees Kruythoff, president of Unilever North America, said, ''Wish-Bone is an iconic brand and the number-one Italian dressings brand in the US. We believe that the potential of both the Wish-Bone and Western brands can now be more fully realised with Pinnacle Foods. As we continue to shape our portfolio to deliver sustainable growth for Unilever, this change will give us the focus to drive growth behind our core foods portfolio.''
Since the acquisition will be structured as an asset purchase, Pinnacle expects to realise approximately $125 million in tax benefits.
The transaction does not include Unilever's facility in Independence, Missouri, at which Wish-Bone and Western brands are currently produced, but the factory will continue to manufacture for Pinnacle Foods under a third-party agreement.
