Claremont, NC - WSMP, Inc. and Tyson Foods, Inc. have signed a definitive asset purchase agreement for WSMP to acquire the core business of Pierre Foods from Tyson.
Terms of the purchase agreement call for WSMP to pay $122 million in cash to Tyson Foods to acquire the brand name and assets of Pierre Foods and to assume its liabilities. The target closing date for the transaction is mid-June, 1998.
The planned transaction was initially announced March 9 when the two companies signed a letter of intent and the definitive agreement was finalized April 10.
The core business portion of Pierre Foods that WSMP plans to acquire represents approximately $150 million in annual revenue. Pierre Foods is primarily engaged in producing and distributing packaged, precooked food products to the foodservice industry. Pierre Foods' current primary customers include a broad cross-section of schools, colleges, vending services, warehouse clubs, restaurants, hospitals, nursing homes and other food distributors across North America.
WSMP has worked with Pierre Foods as a co-packer of its sandwich lines for approximately 10 years and top management of the companies have said they expect to achieve significant beneficial synergies as a result of the transaction. The acquisition will provide WSMP vertical integration in the sandwich industry as the Pierre Foods business. WSMP plans to purchase includes the production of precooked meat products for sandwiches, national distribution channels and existing customer relationships.
Pierre Foods, which is based in Cincinnati, Ohio, has been a part of Tyson Foods only since Jan. 9, 1998, when Tyson acquired Hudson Foods Inc. Pierre Foods was founded in 1946 and for many years operated independently before becoming a part of Hudson Foods.
WSMP is comprised of a variety of prepared foods operations and a restaurant division. In its prepared foods operations, WSMP has the capacity to produce more than 4.5 million microwaveable sandwiches per week and it already produces and packages sandwiches under numerous nationally recognized labels. The company is increasing its involvement in the branded sandwich field through recently announced agreements with four national restaurant companies to introduce new lines of sandwiches and burritos to be sold through supermarkets, vending services and other retail outlets. The restaurant companies involved in these branded sandwich programs are Hardee's Food Systems Inc., Checkers Drive-In Restaurants, Inc., Rally's Hamburgers, Inc., and GB Foods Corp. which is parent of The Green Burrito restaurants. Products marketed under these agreements will be distributed by WSMP's prepared foods division in Claremont, N.C.
David R. Clark, president and chief operating officer of WSMP, said that completing the acquisition of Pierre will make WSMP the major force in the $2 billion prepared sandwich business in the United States. It also should solidify WSMP's role as a significant player in the sandwich segment of the Home Meal Replacement market in the United States. Sandwiches are now the third highest category of ready-to-eat food purchased in American supermarkets, Clark said.
WSMP plans for Norbert E. "Norb" Woodhams to continue as president of Pierre Foods when it becomes a wholly owned subsidiary of the North Carolina-based food service company. It is anticipated that Woodhams also will assume responsibility at that time for all of WSMP's prepared food operations in Claremont. Woodhams has served as president of Hudson Specialty Foods, including Pierre Foods, since 1994.
"One of the important reasons that this acquisition is such a great fit is the excellent working relationship we have had with Pierre Foods and Norb for years," said James C. Richardson, Jr., WSMP's vice chairman and chief executive officer. "Bringing together our abilities and capacities with those of Pierre means a single entity will provide the precooked meats, bread, packaging, marketing and distribution for our sandwiches."
In addition to the sandwich and bakery portion of its prepared foods operations, WSMP is one of the nation's largest country ham producers. WSMP's restaurant division owns and operates 36 Texas-style Sagebrush(R) steakhouse restaurants in North Carolina, South Carolina, Virginia and Tennessee. The company's other restaurant operations include 24 company-owned and 43 franchised restaurants, with a majority of these being Western Steer(R) Steaks, Buffet and Bakery restaurants, Prime Sirloin(R) Buffet, Bakery and Steaks restaurants, and Bennett's(TM) Smokehouse and Saloon restaurants.
Press Here for Info on Setting Your Own Web Site
Meat Industry Insights News Service
P.O. Box 553
Northport, NY 11768
Phone: 631-757-4010
Fax: 631-757-4060
E-mail: sflanagan@sprintmail.com
Web Site: http://www.spcnetwork.com/mii