US-based food company Pinnacle Foods has entered into an agreement to acquire Wish-Bone and Western dressings brands from Unilever for $580m in cash.
The acquisition includes a broad range of liquid and dry-mix salad dressing flavors under the Wish-Bone and Western brand names. These brands have combined annual sales of $190m.
The deal does not include Unilever's facility in Independence, Missouri, where Wish-Bone and Western brands are currently produced. However, the factory will continue to manufacture for Pinnacle Foods under a under a third-party agreement.
Pinnacle Foods noted that brands have attractive margins and high free cash flow conversion and are expected to immediately enhance the company's margins.
Unilever North America president Kees Kruythoff said that that Wish-Bone is an iconic brand and the number-one Italian dressings brand in the US.
"As we continue to shape our portfolio to deliver sustainable growth for Unilever, this change will give us the focus to drive growth behind our core foods portfolio," Kruythoff added.
Pinnacle Foods chief executive officer Bob Gamgort said that the acquisition of Wish-Bone is a perfect fit with the company's successful strategy of 'Reinvigorating Iconic Brands.'
"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. We are excited to apply our innovation capabilities to this great brand," Gamgort added.
Pinnacle Foods noted that cost synergies are expected to be substantial, as it plans to invest $40-50m in capital to consolidate production into an existing Pinnacle facility and fully leverage its supply chain.
Pinnacle Foods plans to fund the transaction through cash on hand and new debt. The transaction, which is subject to regulatory approval and customary closing conditions, is expected to close later in Q3, or early Q4 2013.
