Pinnacle to Acquire Unilever Business

Pinnacle to Acquire Unilever Business

Pinnacle Foods acquires the Wish-Bone salad dressings business from Unilever PLC. The acquisition, which is subject to customary closing conditions, is expected to be completed in late Q3 or early Q4 2013.    

Wish-Bone is a leading salad dressing brand, holding the No. 1 share position in the Italian segment of the category and the No. 3 position overall. The portfolio being acquired includes a broad range of liquid and dry-mix salad dressing flavors under the Wish-Bone and Western brand names. The brands have attractive margins and high free cash flow conversion and are expected to immediately enhance Pinnacle margins. Combined annual sales of the brands being acquired total approximately $190 million.

The purchase price of the transaction is $580 million, which will be funded with cash on hand and new debt. Given that the acquisition will be structured as an asset purchase, Pinnacle expects to realize approximately $125 million in tax benefits on a net present value basis.  Cost synergies are expected to be substantial, as the Company plans to invest $40-50 million in capital to consolidate production into an existing Pinnacle facility and fully leverage the company's supply chain. Unilever will continue to manufacture the brands to be acquired, for a period of time, under a third-party manufacturing agreement. Synergy realization will be phased over time, beginning in 2014 and ramping up through 2015, as manufacturing is transitioned to Pinnacle. Full run-rate EBITDA of the acquired business is expected to reach $65 million, once full synergies are realized.