US: Pinnacle eyes branded dry food acquisition
Pinnacle Foods Group has announced details of a possible acquisition in the branded food business in the dry food category, the company has said.
In a statement the company said that its wholly-owned subsidiary Pinnacle Foods Corporation has entered into an exclusivity agreement that allows Pinnacle to conduct due diligence and negotiate definitive agreements regarding the purchase of certain assets and the assumption of certain liabilities relating to a food company.
Pinnacle said it intends to fund the purchase price through the issuance of additional equity to Pinnacle's current equityholders and by increasing the term "B" loan under Pinnacle's senior credit facility by US$143m. To facilitate completion of the acquisition of the target business, Pinnacle is also seeking an amendment of its senior credit agreement.
Pinnacle said that the target business achieved unaudited net sales in 2005 of approximately between $220m and $230m.
"Based on such unaudited financial information, Pinnacle estimates that the acquisition of the target business will be accretive to Pinnacle's total debt leverage ratio and will be neutral to Pinnacle's interest coverage ratio," the statement said.
"To date, the parties have not entered into a definitive asset purchase agreement and there can be no assurance that the parties' negotiations will result in the parties entering into a definitive asset purchase agreement on terms described above or at all. Even if the parties should enter into a definitive asset purchase agreement, there can be no assurance that the transaction will be consummated," it concluded.
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