Wind Point Partners, Chicago, reports that it has asked Barclays plc to run an auction for Hearthside Food Solutions LLC, Downers Grove, Ill., hoping it can fetch more than $1 billion, according to reports. Hearthside is said to have earnings of around $120 million before interest, tax, depreciation and amortization.
Hearthside produces baked foods and snacks out of 20 manufacturing facilities in eight U.S. states for the world's premier food companies, employing more than 7,500 full-time workers, according to its website. Hearthside was created in 2009 by Wind Point and former Ralcorp Frozen Bakery Products president and ConAgra Foods Inc. veteran Rich Scalise, who now serves as Hearthside's chairman and CEO.
Hearthside started with four manufacturing plants and just more than 2,000 employees, but grew quickly through acquisitions. Last May, it was merged with another Wind Point portfolio company that specializes in food packaging, Ryt-way Industries, to create a food contract manufacturer with more than $1 billion in annual sales.
With outsourcing companies looking for greater economies of scale and expanding their offerings to meet the increasingly complex formulation needs of their clients, the fragmented food contract manufacturing sector is expected to see more mergers and acquisitions, cite market reviews from investment banking firm Capstone Partners LLC.
One of the major deals of the year in that market was the $5-billion acquisition of Ralcorp by ConAgra in January, which created the largest private-brand packaged food business in North America. In May, Hearthside agreed to sell Golden Temple, its ready-to-eat cereals and granola making business, to Post Holdings Inc., the company behind the Raisin Bran and Honey Bunches of Oats cereals, for $158 million in cash.
Source: Reuters