Dean Foods intends to spin-off its Specialty Foods Group
The business lines included in the new company are expected to produce 2005 revenues of over $700 million and operating margins of between approximately 12% and 14%.
28/01/05 Dean Foods Company has announced that it intends to pursue a tax-free spin-off of its Specialty Foods Group business to Dean shareholders. The Company also announced that, effective immediately, an experienced and proven management team headed by Sam Reed, former CEO of Keebler Foods Company, has joined the Specialty Foods Group to lead the new company. In conjunction with their employment, the new management team has made a cash investment of $10 million in the Specialty unit, representing 1.67% ownership of the new business.
The planned debt-free spin-off of the Specialty Foods Group will create a publicly traded private label and regionally branded consumer packaged goods company with approximately 1,700 employees and estimated 2005 revenues of over $700 million. In conjunction with the spin-off, Dean Foods is moving its Mocha Mix non-dairy creamer, food service dressings, and Second Nature egg substitute businesses into the Specialty Foods Group from the Dean`s Branded Products and Dairy Groups. The newly created company holds leading positions in the private label pickle and non-dairy powdered coffee creamer markets. Additionally, the firm is a supplier of aseptic cheese sauces, pudding, peppers, dressings, liquid non-dairy coffee creamers and egg substitutes to the retail and foodservice channels. The Specialty Foods unit`s strong operating cash flows, combined with an unleveraged balance sheet, will provide the new management team with significant financing capacity for the potential expansion of its platform through targeted acquisitions and other initiatives.
The business lines included in the new company are expected to produce 2005 revenues of over $700 million and operating margins of between approximately 12% and 14%. If the unit were retained by Dean it would be expected to contribute approximately $0.37 to $0.39 per share to Dean Foods` 2005 adjusted earnings. Inclusive of the businesses that are being spun off, Dean`s 2005 adjusted earnings are expected to be between $2.20 and $2.30 per share. Information about the Specialty Foods Group segment`s 2004 performance will be available in Dean`s upcoming earnings announcement on February 10, 2005.
The spin-off is intended to take the form of a tax-free distribution to Dean Foods` shareholders of a new publicly-traded stock. The stock distribution ratio will be determined at a future date. The transaction is expected to be completed in the third quarter of 2005, subject to confirmation by the Internal Revenue Service of the tax-free nature of the transaction, registration of the new security with the Securities and Exchange Commission and certain other customary conditions.
Dean Foods Company is one of the leading food and beverage companies in the United States. Its Dairy Group division is the largest processor and distributor of milk and other dairy products in the country, with an extensive refrigerated direct-store-delivery network. Through its White Wave and Horizon Organic brands, Dean Foods Company also owns the nation`s leading soymilk and organic milk brands. The company`s Specialty Foods Group is a leading manufacturer of private label pickles and non-dairy powdered coffee creamers. Dean Foods Company and its subsidiaries operate approximately 120 plants in 36 U.S. states, Spain and the United Kingdom, and employ approximately 29,000 people.
