Birds Eye Frozen Food Unit Sold for $140 Million : Acquisition: Dean Foods Co. has agreed to buy the Orange-based division of Kraft General Foods.
ORANGE — Kraft General Foods Inc. said Monday it has agreed to sell its Orange-based Birds Eye frozen vegetables division to Dean Foods Co. for $140 million.
Birds Eye, which has annual sales of about $250 million, was put up for sale in September as part of a strategy by Kraft’s parent company, Philip Morris Cos., to pare slow-growth divisions.
There are about 25 employees in Birds Eye’s headquarters in Orange, part of a work force of 50 in California and 900 nationwide. Tim Bondy, a Dean Foods vice president, said his company has not yet decided whether to keep those jobs in California, move them or otherwise consolidate functions.
Birds Eye is the No. 3 U.S. seller of plain frozen vegetables, according to Information Resources Inc. in Chicago. And it is No. 1 in sales of prepared frozen vegetables--those packaged with spices or sauces.
The company has processing plants in Minnesota, New York and Mexico. Besides the well-known Birds Eye brand, it also makes sauces and mixed vegetable products under the brands Farm Fresh, International Recipe and Easy Recipe.
Dean Foods, based in Franklin Park, Ill., is a diversified food processor and distributor that is a major private labeler of canned and frozen veggies. The Birds Eye acquisition will complement its current operations by giving it a well-known brand name, the company and analysts said.
The Birds Eye deal doubles Dean Foods’ vegetable business, said John M. McMillin, analyst for Prudential Securities in New York. “The vegetable business has been underperforming, and the purchase of a top-quality brand gives them scale and size,†he said.
The timing is perfect, he said, because the frozen-foods business is just now bouncing back from the summer’s Midwest flooding.
Vegetables now represent about 15% of Dean Foods’ annual sales of $347 million. The company also sells dairy products, condiments and other food products.
“I think it’s a good move for Philip Morris and Dean Foods,†said Roy D. Burry, analyst for the brokerage Kidder, Peabody & Co. in New York. “Birds Eye is not big relative to Philip Morris, and they cannot manage it effectively.
Analyst Sandy Bing, who follows Philip Morris for brokerage Donaldson Lufkin & Jenrette in New York, said the Birds Eye sale “fits into a strategy of theirs to reposition their food group from areas where they haven’t had that much success.â€
The sale further frees Philip Morris to concentrate on its larger divisions, such its Marlboro cigarettes and other brands, and its Miller beer brands, the analyst said.
Birds Eye was no longer at the top of the company’s list of core businesses, Bing said: “Maybe it was 30 years ago, but it’s not anymore.â€
In Monday’s trading on the New York Stock Exchange, Dean Foods closed at $27.125 a share, up $1.50. Philip Morris closed at $54.25, up 50 cents.
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