USA: International Multifoods announces amendments to Pillsbury mix business purchase agreement
Highlights of the amended agreement include the following:
- Multifoods will receive an exclusive, royalty-free license for use of the Pillsbury and the Doughboy trademarks in the desserts and baking mix categories. These licenses are renewable without cost in 20-year increments at Multifoods' discretion.
- Multifoods will acquire five additional brands at no additional cost. Included are the Pet brand of evaporated milk and dry creamer; the Farmhouse brand of rice and pasta side dishes; and three flour brands -- Softasilk, a premium cake flour; La Pina, a tortilla flour sold primarily on the West Coast; and Red Band, a biscuit flour sold primarily in the Southeast United States. These brands generate approximately $50 million in annual sales.
- Multifoods will purchase the General Mills Toledo plant for $11.5 million. Under the original agreement, Multifoods planned to lease space at the Toledo facility from General Mills. The Toledo plant will be converted to accommodate production of Pillsbury products, most of which are currently manufactured at a Pillsbury plant in Murfreesboro, Tenn. The conversion process, which will be undertaken at General Mills' expense and completed within 12 months, will include cost and quality guarantees, and will be overseen by an independent trustee.
- Multifoods will be allowed to use the Pillsbury and the Doughboy trademarks on additional baking-related products in the baking goods aisle.
- Multifoods will have the right to sell Pillsbury-branded desserts and specialty products in all U.S. territories, including Puerto Rico.
Beyond the brands noted above, the transaction also includes the Hungry Jack, the Martha White and the U.S. Robin Hood brands, in addition to the Pillsbury brand in the desserts and baking mix categories. These brands have combined net sales of about $500 million. Including the $11.5 million for the Toledo plant, Multifoods will pay approximately $316 million in cash for these assets. The original purchase price was approximately $305 million.
In addition to these amendments, Diageo will guarantee $200 million of Multifoods' total financing capacity of $650 million, which will reduce the company's interest costs. Furthermore, General Mills and Diageo will put $10 million in escrow for Multifoods to use to finance a direct sales force, if the company so chooses, or to meet unforeseen contingencies in the acquired businesses.
"We are very excited about this acquisition," said Gary E. Costley, International Multifoods chairman, president and chief executive officer. "Our focus will be on bringing innovation to these categories and driving the growth of these brands.
"These businesses are an excellent fit with Multifoods' existing manufacturing operation and our grain-based foods expertise," Costley said. "As part of a company dedicated to branded food products, we believe that competition in the marketplace will be enhanced. We look forward to completing the transaction as soon as possible, and moving ahead with our plans to create a world-class branded foods company with top people and processes to deliver strong financial results and greater shareholder value."
Fiscal 2003 Outlook
Multifoods expects its full-year fiscal 2003 earnings to be in the range of $1.90 to $2.00 per share. The company said that its fiscal 2003 estimates reflect the anticipated accretion from the acquisition, and the company's assumptions for continued economic softness, lower pension income due to current weakness in the financial markets and a higher tax rate.
Multifoods also announced today that it intends to file an application under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, with the Federal Trade Commission in connection with its proposed acquisition.
The acquisition also is subject to the closing of the General Mills/ Pillsbury merger.
About International Multifoods
International Multifoods is a manufacturer for and distributor to the foodservice industry in North America. The company also is a leading manufacturer and marketer of consumer foods in Canada. Further information about International Multifoods is available on the Internet at www.multifoods.com.
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations or beliefs, including, but not limited to, statements concerning the company's operations and financial performance and condition. For this purpose, statements that are not statements of historical fact may be deemed to be forward-looking statements. The company cautions that these statements by their nature involve risks and uncertainties, and actual results may differ materially depending on a variety of important factors, including, among others, the consummation of the proposed acquisition and the timing of the close; costs associated with the acquisition should it fail to close; actions in the financial markets; regulatory approval related to the proposed acquisition; integration problems associated with the proposed acquisition; the results of our review of strategic alternatives for Multifoods Distribution Group; the impact of competitive products and pricing; market or weather conditions that may affect the costs of grain, cheese, other raw materials, fuel and labor; changes in laws and regulations; fluctuations in interest rates; fluctuations in foreign exchange rates; risks commonly encountered in international trade; and other factors as may be discussed in the company's Annual Report on Form 10-K for the year ended March 3, 2001, and other reports filed with the Securities and Exchange Commission.
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