Performance Food Group (Nasdaq/NM:PFGC)

Highlights of the Acquisition:

  • Adds category leader in the rapidly growing fresh-cut produce industry
  • Adds over $500 million annually to Performance Food Group’s revenues
  • Expands fresh-cut expertise in retail food segment
  • Expected to add $0.10 to $0.14 to earnings per share in 2002

Performance Food Group (Nasdaq/NM:PFGC) today announced that it has signed a definitive agreement to acquire privately owned Fresh Express, the nation’s largest independent fresh-cut produce processor. The total consideration to be paid for the acquisition is approximately $290 million, including cash and assumption of liabilities. An additional $10 million will be payable upon the achievement of certain operating targets. Closing of the transaction, which is subject to customary conditions, is expected at the end of the third quarter of 2001.

Fresh Express, based in Salinas, Calif., is the category leader in the approximately $6 billion fresh-cut produce industry. Fresh Express pioneered the retail packaged salad category in 1989 with the introduction of fresh value-added salads and has since grown to generate sales of $509 million in its February 2001 fiscal year. In addition, Fresh Express is the leader in providing controlled atmosphere technology and packaging of perishable produce to ensure product freshness. Fresh Express today markets a diverse line with over 100 products to most major supermarkets nationwide and a large number of foodservice operators. The company operates five strategic processing facilities (Salinas, Ca., Greencastle, Pa., Colorado Springs, Co., Atlanta, Ga. and Chicago, Il.) to service the entire United States.

Robert C. Sledd, Chairman and Chief Executive Officer of Performance Food Group, remarked, “The acquisition of Fresh Express will significantly increase our penetration of the fresh-cut produce category, including both retail and foodservice outlets, and will establish us as the leader in one of the fastest-growing categories of the food industry. Our growth to this point in the fresh-cut sector has occurred principally as a processor of fresh-cut produce to multi-unit restaurant chains and other foodservice outlets. We believe there are numerous marketing opportunities to combine Fresh Express’ leading market position and reputation for quality and innovation among retail supermarkets with our expertise in product innovation and relationships with many leading restaurant chains. We also expect to benefit from operating synergies related to produce sourcing and operating efficiencies. The management of Fresh Express has distinguished itself in delivering consistently superior customer satisfaction by adhering to stringent quality standards and pioneering a number of product and packaging innovations. Fresh Express is an organization focused on customer service, and we believe that this culture fits with our mission of being the innovative leader in customer service.”

Sledd added, “The acquisition is expected to be neutral to Performance Food Group’s earnings per share in the fourth quarter. However, we expect the acquisition to add $0.10 to $0.14 per share to 2002 earnings depending on the terms of the final financing for the acquisition.”

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“We believe this strategic business move aligns two companies with similar visions and combines the foodservice and retail market leaders for powerful growth,” remarked Steve Taylor, Chairman and Chief Executive Officer of Fresh Express. “There is substantial potential for continued growth in the fresh salad category and for expanding into new areas of the fresh foods market. We are extremely excited about joining the Performance Food Group team and believe that with our combined operations, we will be well equipped to serve all distribution channels, capitalize on our expanded marketing breadth and walk together on the path toward even greater achievements and success. We are especially pleased that this alignment will lead to positive career and employment opportunities for the members of our Fresh Express family.”

Performance Food Group markets and distributes more than 31,000 national and private label food and food-related products to approximately 27,000 restaurants, hotels, cafeterias, schools, healthcare facilities and other institutions. For more information on Performance Food Group, visit

Certain statements made herein are forward-looking statements under the Private Securities Litigation Reform Act of 1995. They include statements regarding anticipated earnings for next year, sales momentum, customer and product sales mix, expected efficiencies in the Company’s business and the ability of Performance Food Group to realize expected synergies following acquisitions. These statements involve risks and uncertainties and are based on current expectations and management’s estimates; actual results may differ materially. The risks and uncertainties which could impact these statements include, but are not limited to, the relatively low margins and economic sensitivity of the foodservice business, thee Company’s reliance on major customers, the ability to identify and successfully complete acquisitions of other foodservice distributors and management of the Company’s planned growth, all as detailed from time to time in the reports filed by the Company with the Securities and Exchange Commission.

Facts In Brief

  • (Performance Food Group Acquisition Of Fresh Express)

    About the Acquisition

    • Terms include cash of $290 million, including assumption of certain liabilities, and an additional $10 million payable upon the achievement of certain operating targets
    • Closing expected at the end of the third quarter of 2001
    • Current management to remain
    • Acquired operations to be managed as Fresh Express division within the Fresh Cut operating segment
    • Significant synergies expected from combined procurement strength
    • Expected to add $0.10 to $0.14 per share to earnings in 2002

    About Fresh Express

    • Leader in the fresh-cut packaged produce market
    • Generated net sales of $509 million in its February 2001 fiscal year
    • Pioneered category through introduction in 1989 of value-added packaged salads
    • Leader in controlled atmosphere technology and packaging for perishable produce
    • Customer base includes virtually every large retailer, including Safeway, Kroger, Albertson’s, Food Lion, Fleming, Ralphs and Wal-Mart
    • Operates five processing facilities (Salinas, Ca.; Greencastle, Pa.; Colorado Springs, Co.; Atlanta, Ga. and Chicago, Il.) to support nationwide marketing program
    • Current product line numbers over 100 products ranging from traditional lettuces to fancy greens to convenient salad kits that include salad dressing and other condiments
    • Was awarded in 1998 and 1999 the Cannondale Associates PoweRanking and Progressive Grocer PROGRO Silver Circle award, presented to best business operators in the produce industry

    About Performance Food Group

    • Major foodservice distributor with three operating segments (Broadline, Customized and Fresh Cut)
    • Ranks as nation’s fourth largest broadline distributor
    • Markets and distributes over 31,000 national and proprietary brand food and non-food products
    • Markets to approximately 27,000 customers in the foodservice industry
    • Broadline customers range from individual restaurants to regional and franchisees of leading restaurant chains, including Burger King, Wendy’s, Subway, Church’s and Popeye’s
    • Markets proprietary brands such as Pocahontas, Healthy USA and Premium Recipe through Pocahontas Foods marketing arm
    • Customized operations serve casual-dining chains including Cracker Barrel Old Country Store, Outback Steakhouse and TGI Friday’s
    • Customized operations serves customers in 49 states and several foreign countries through five dedicated distribution facilities
    • Fresh-cut operations process over 860 fresh-cut produce offerings under proprietary Fresh Advantage and Redi-Cut brands. Principal marketing emphasis is on quick-service restaurant chains including Burger King, KFC, McDonald’s, Pizza Hut, Subway and Taco Bell restaurants
    • Fresh-cut operations conducted at four processing facilities (Atlanta, Ga.; Chicago, Il.; Kansas City, Mo. and Dallas, Tx.)