Universal Foods Agrees to Sell Cheese Division
MILWAUKEE (AP) _ Universal Foods Corp., which successfully fought a hostile takeover bid last year, announced Monday it has tentatively agreed to sell its cheese division to the division’s current management.
The company said the proposed sale, which should be completed this spring, is intended to generate capital for other investment opportunites.
Terms were not disclosed.
In addition to cheese, Universal Foods manufactures yeast products, frozen potato products, food colors and flavors and dehydrated food products.
The cheese division, which employs about 400 people, generated $198 million in revenues during fiscal year 1989, or about 24 percent of the company’s total revenue of $837 million.
Geoff Hibner, vice president of finance for Universal Foods, said the company wanted to focus its attention on developing other parts of its operations.
″The cheese business is tough right now,″ Hibner said. ″The price of milk has skyrocketed and cheese prices just aren’t keeping up.″
Hibner said the money from the division’s sale will be used for development of the company’s frozen food division, which he said is growing fastest, and development of its flavor and color division.
″We made a number of acquisitions last year in the flavor and color business and we anticipate more,″ Hibner said. ″That’s really our business - we want to be in the food ingredient supply business.″
Lee Brinkerhoff and Harry Smith, vice presidents and general managers of the cheese division, have been planning the buyout attempt since the holidays, Brinkerhoff said.
″We already have the initial equity needed for the transaction, but we think we’ll need the help of other employees to make the transaction work,″ he said.
Brinkerhoff said he and Smith have had talks with several investors but have not yet identified any definite outside sources of capital. He said no immediate changes in the division’s operations are planned.
″For the time being, we plan business as usual,″ he said.
Hibner said he does not anticipate Universal Foods will sell any other divisions.
Guy A. Osborn, president and chief executive officer, said in a prepared statement he anticipates Universal Foods will reach its earnings target of $1.93 per share this year.
Universal Foods last year successfully fended off a hostile takeover by Massachusetts-based Amanda Acquisition Corp., which had offered more than $700 million for the company.
The takeover was abandoned after courts refused to overturn Universal Foods’ poison-pill defense or Wisconsin’s anti-takeover law, both of which blocked the takeover.