Swiss food giant Nestlé today [Tuesday] announced that its US subsidiary Nestlé Holdings will acquire the assets of Chef America, a leading US-based frozen foods business.
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Nestlé will pay US$2.6bn in cash, which includes the assumption of net indebtedness. The tax benefits inherent in the transaction bring the net consideration to approximately US$2.0bn.
Based in Denver, Colorado, Chef America is best known for its frozen hand-held food products that are sold under the Hot Pockets, Lean Pockets and Croissant Pockets brands. The company which is privately held, is expected to generate sales revenues of US$720m for the year ending 31 December, 2002. Chef America’s profit level is in the top tier of the US food companies.
It has achieved a compound annual sales growth rate of above 10% from 1996 to 2001 and is on track to grow in excess of 15% in 2002.
The strong growth results mainly from the increased popularity of its products, which satisfy the changing eating habits of American consumers (greater convenience, eating on the go, trend towards smaller and more frequent meals). Founded in 1977, Chef America is one of the largest and fastest growing privately held food companies in the United States and the fifth-largest manufacturer of frozen prepared foods.
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By GlobalDataCombining Chef America with Nestlé’s US Prepared Foods Division will produce incremental revenue from increased sales into the US foodservice channel and in international markets.
Peter Brabeck, CEO of Nestlé, stated: “Chef America is an ideal and strategically important complement to our own frozen food activities in the USA, which include Stouffer’s and Lean Cuisine. I am very pleased to see Chef America’s innovative, high-growth and high-margin business joining us, giving Nestlé the lead in two out of three principal categories in the world’s largest frozen food market.”
The transaction is subject to regulatory approvals and is expected to be completed within 60 days from the date of announcement.
