Monterey Gourmet Foods Agrees to be Acquired by Pulmuone

The merger agreement provides for a wholly owned subsidiary of Pulmuone to acquire the Company in a two-step transaction. The first step will consist of a cash tender offer for all outstanding shares of Company common stock at a purchase price of $2.70 per share in cash.

09 Oct 2009 --- Monterey Gourmet Foods, Inc., a manufacturer and marketer of fresh, gourmet, refrigerated food products, has entered into a definitive merger agreement with Pulmuone U.S.A., Inc. to be acquired through a cash tender offer, followed by a merger with and into a subsidiary of Pulmuone, for a price of $2.70 per share in cash. The tender offer is scheduled to commence on or about November 9, 2009, and to expire on the 20th business day from and including the commencement date unless extended in accordance with the terms of the merger agreement and applicable law. Pulmuone U.S.A., Inc. is a U.S. subsidiary of Pulmuone Holdings Co., Ltd. which is a market leader in the fresh/health foods category in Korea with annual sales of approximately $1 billion.

The $2.70 per share price represents a premium of approximately 57.8% over the weighted average price of the Company's common shares for the last 30 trading days. The transaction is valued at approximately $45.8 million. Pulmuone and the Company anticipate the transaction can close by the end of the fourth quarter of 2009.

The merger agreement provides for a wholly owned subsidiary of Pulmuone to acquire the Company in a two-step transaction. The first step will consist of a cash tender offer for all outstanding shares of Company common stock at a purchase price of $2.70 per share in cash. In the second step, the tender offer will be followed by a merger in which any remaining shares of Company common stock will be converted into the right to receive the same cash price per share paid in the tender offer, and the Company will cease to be a public company.

The Company's Board of Directors has unanimously approved the merger agreement and the transactions contemplated by the merger agreement, and has resolved to recommend that the Company's stockholders tender their shares in connection with the tender offer. The closing of the tender offer is subject to certain customary conditions, including the tender of at least a majority of the Company's outstanding shares. In addition, upon closing of the tender offer and assuming the minimum condition is satisfied, Pulmuone has been granted the option to purchase a number of authorized but unissued shares from the Company that would enable Pulmuone to hold one share more than 90% of the Company's outstanding common stock.

The merger agreement contains a “go-shop” provision whereby the Company's Board of Directors, with the assistance of its financial advisor, has the right to solicit acquisition proposals from third parties until November 7, 2009. There can be no assurance that the solicitation of proposals will result in an alternative transaction. The Company does not intend to disclose developments with respect to the solicitation process unless and until its Board of Directors decides to accept an alternative proposal. Within 5 business days after the end of the go-shop period, Pulmuone will commence the tender offer referred to above.

William Blair & Company, L.L.C. is serving as financial advisor to the Company and has delivered a fairness opinion to the Company's Board of Directors in connection with the proposed transaction. Husch Blackwell Sanders LLP and Shapiro, Buchman, Provine, LLP are serving as the Company's legal advisors. Cappello Capital Corp. is serving as financial advisor to Pulmuone. Skadden, Arps, Slate, Meagher & Flom LLP is serving as Pulmuone's legal advisors.