This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

The Deal: Pinnacle Foods Picks Up Wish-Bone for $580M

NEW YORK ( The Deal) -- Private equity-backed food conglomerate Pinnacle Foods (PF - Get Report), maker of Hungry Man dinners, broke off the Wish-Bone salad dressing unit from Unilever plc/NV (UN) for $580 million, in a deal announced Monday, Aug. 12.

The purchase price will be funded with cash on hand and debt, Pinnacle said.

According to sources, the salad dressing brand had been on the block for several months. Next on Unilever's buffet of food brands up for disposal is its pasta sauce business including Ragu, sources said.

The deal by Unilever to sell Wish-Bone--which holds the number three position in the salad dressing category--to Pinnacle is expected to completed in the late third quarter or early fourth quarter. The Wish-Bone business includes the Western salad dressing brand and has total annual sales of $190 million.

Pinnacle said that since the acquisition is structured as an asset purchase, it will realize $125 million in tax benefits on a net present basis.

The food group also said it will invest $40 million to $50 million to produce Wish-Bone and Western brand products in its existing facilities. In the interim, Unilever will continue to manufacture the salad dressings as a third party manufacturer.

Once synergies are implemented with manufacturing shifting to Pinnacle by 2015, the company said full run-rate EBITDA for the salad dressing business will be $65 million.

Pinnacle in April arranged a $1.8 billion loan facility for refinancing. Part of that package included a $1.63 billion term loan due in 2020 and a $150 million revolving credit facility due in 2018. The term loan and the revolver were both priced at Libor plus 250 basis points, with the LIBOR floor at 0.75%. Bank of America Merrill Lynch (BAC - Get Report) led the refinancing of debt associated with the Blackstone Group's (BX - Get Report) $3 billion buyout of Pinnacle on 2007.

Blackstone took the company public this last March, raising $580 million, which was partially used to pay down debt.

Prior to selling Wish-Bone, Unilever in January unloaded its Skippy peanut butter business for $700 million to Hormel Foods (HRL - Get Report). Justifying that purchase price was Skippy's leading position in China, where Hormel plans to leverage to sell more of its own products such as a Spam.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
BAC $17.22 1.18%
BX $40.92 0.12%
HRL $56.98 1.08%
PF $46.66 2.46%
UN $42.27 1.03%

Markets

DOW 17,757.91 +138.40 0.79%
S&P 500 2,077.42 +14.31 0.69%
NASDAQ 5,013.1230 +26.2560 0.53%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs