Hicks, Muse, Tate & Furst has been declared top bidder for Vlasic.
Heinz agreed to buy Vlasic’s pickle and barbecue sauce businesses on the day it filed for bankruptcy protection. But Hicks, Muse, Tate & Furst offered $370 million for the whole business and came out on top. Hicks has made some good food industry investments in the past, but may find the Vlasic buy-out to be rather a challenge.
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It’s all a bit of a pickle. Vlasic Foods International was looking for buyers for 18 months before it settled on Heinz, but now that deal is off. The US bankruptcy court has declared another company to be the top bidder and this time it is the whole business that is being sold. Heinz’s previous offer for the Open Pit barbecue sauce and Vlasic pickles and condiments businesses was disregarded in favor of American buy-out firm Hicks, Muse, Tate & Furst. Hicks has offered $370 million plus warrants to purchase 15% of its common stock, in order to take all of Vlasic’s North American operations, including Swanson frozen foods.
According to Vlasic, bankruptcy proceedings were started in late January in order to speed up the sale to Heinz for an adjusted price of around $174-9 million. This deal has been terminated according to its terms to allow the Hicks’ sale to proceed. While Vlasic has publicly announced the new agreement, the sale is still not over: other companies have until May 3 to put forward competing offers.
The news must come as a disappointment for Heinz. The company avoided the prevailing buying trend food manufacturers last year, instead concentrating on developing highly focused units. The Vlasic pickles and barbecue sauce would have slotted nicely into Heinz’s meal and snack solutions unit. Heinz could still return to the table with a higher offer, but as it does not want to buy Swanson this is unlikely and the company will now need to look elsewhere to strengthen its sauces business.
For Hicks, an acquisition of Vlasic would continue its recent theme of investing in safer ‘old economy’ stocks after having its fingers burned by the downturn in the telecoms sector. The firm has recently announced a change in strategy and is attempting to raise a $3 billion buyout fund. Hicks has made some good deals in the food industry in the past but there is still some doubt over whether it can really do much with the whole Vlasic company.
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