Pinnacle Acquiring Wish-Bone Salad Dressings

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Pinnacle Acquiring Wish-Bone Salad Dressings


Pinnacle Foods has entered into a definitive agreement to acquire the Wish-Bone salad dressings business from Unilever PLC, in a deal expected to be immediately accretive to Parsippany, N.J.-based Pinnacle. The acquisition is anticipated to wrap up late in the third quarter or early in the fourth quarter of the company’s fiscal 2013.

Wish-Bone holds the No. 1 share position in the Italian segment of the salad dressing category and the No. 3 position overall. The portfolio being acquired encompasses a wide range of liquid and dry-mix salad dressing flavors under the Wish-Bone and Western brand names. These brands, with their attractive margins and high free cash flow conversion, are expected to immediately enhance Pinnacle’s margins. Combined annual sales of the brands being acquired come to about $190 million.

“The acquisition of Wish-Bone is a perfect fit with our successful strategy of ‘Reinvigorating Iconic Brands,’” noted Pinnacle Foods CEO Bob Gamgort. “In addition to enabling significant cost synergies and tax benefits, the transaction enhances our ability to offer consumers meal solutions and recipe ideas across our broad portfolio of brands.”

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 about $125 million in tax benefits on a net present value basis. Cost synergies are expected to be substantial, as the company intends to invest $40 million to $50 million in capital to consolidate production into an existing Pinnacle facility and fully leverage the company's supply chain. Englewood Cliffs, N.J.-based Unilever USA will continue manufacturing the brands to be acquired for a period of time, under a third-party manufacturing agreement. Synergy realization will be phased over time, starting in 2014 and accelerating through 2015, as manufacturing transitions to Pinnacle. Full run-rate EBITDA of the acquired business is expected to attain $65 million once full synergies are realized.

Pinnacle’s collection of shelf-stable and frozen food brands hold the No. 1 or No. 2 market position in 10 of the 12 major categories in which they compete. Brands include Duncan Hines baking mixes and frostings, Vlasic shelf-stable pickles, Mrs. Butterworth’s and Log Cabin table syrups, Armour canned meats, Open Pit barbecue sauces, Birds Eye and Birds Eye Steamfresh frozen vegetables, Birds Eye Voila! complete bagged frozen meals, Van de Kamp’s and Mrs. Paul’s frozen prepared seafood, Hungry-Man frozen dinners and entrees, Aunt Jemima frozen breakfasts, Lender’s frozen and refrigerated bagels, Celeste frozen pizza, Tim’s Cascade Snacks, Hawaiian kettle-style potato chips, Snyder of Berlin, and Husman’s snacks. The company also runs foodservice and private label businesses.