Claremont, NC - WSMP, Inc. and Tyson Foods, Inc. have signed a letter of intent for WSMP to acquire the core business of Pierre Foods from Tyson.
Details of the cash transaction are not being disclosed, but the letter of intent calls for WSMP to acquire the brand name and assets of Pierre Foods and to assume its liabilities. The target closing date for the transaction is mid-June, 1998.
Completion of the transaction will be contingent on fulfillment of certain conditions, including financing. WSMP's management is discussing its financing options with commercial and investment banking firms.
The core business portion of Pierre Foods that WSMP plans to acquire represents approximately $150 million in revenue.
Cincinnati, Ohio-based Pierre Foods became part of Tyson when that company acquired Hudson Foods, Inc., effective January 9, 1998. Pierre Foods, which was founded in 1946, is primarily engaged in producing and distributing packaged, precooked food products, including sandwiches, to the foodservice industry.
Acquisition of Pierre will make WSMP the major force in the $2 billion prepared sandwich business in the United States, says David R. Clark, president and chief operating officer of WSMP. The acquisition also should solidify WSMP's role as a significant player in the sandwich segment of the Home Meal Replacement market in the United States. Sandwiches are the third highest category of ready-to-eat food purchased in grocery stores today, Clark said.
It is anticipated that Norbert E. "Norb" Woodhams will continue as president of Pierre Foods when it becomes a wholly owned subsidiary of WSMP. At that time, Woodhams would assume responsibility for all of WSMP's prepared food operations, including its bakery and sandwich plant and its country ham operations in Claremont. Woodhams has served as president of Hudson Speciality Foods, including Pierre Foods, since 1994.
"We have had an excellent working relationship with Pierre Foods and Norb for years, and that is a major reason this acquisition makes so much sense," said James C. Richardson, Jr., WSMP's vice chairman and chief executive officer. "WSMP has long had bread that is different from any other on the market and better than any other for making frozen sandwiches. Bringing together our abilities and capacities with those of Pierre will provide WSMP with vertical integration in the sandwich business, including precooked meats, bread, packaging, marketing and distribution. We feel the synergies that all of this represents will be significant for our company."
Pierre Food's customers include a broad cross-section of schools, colleges, vending services, warehouse clubs, restaurants, hospitals, nursing homes and other frozen food distributors across North America.
Tyson Foods, which is headquartered in Springdale, Ark, is the world's leading producer, processor and marketers of chicken and other poultry based food products, as well as other convenience food items. Tyson Foods will continue to operate the former Hudson Specialty Foods plants at Caryville, Tennessee, and Albert Lea, Minnesota.
WSMP is comprised of a variety of prepared foods operations and a restaurant division. In its prepared foods operations, WSMP has the capacity to produce more than 4.5 million microwaveable sandwiches per week and it already produces and packages sandwiches under numerous nationally recognized labels. It also provides various packaged items targeted for the home meal replacement market and is one of the nation's largest country ham producers.
In addition to its prepared food operations, WSMP's restaurant division owns and operates 35 Texas- style Sagebrush(R) steakhouse restaurants in North Carolina, South Carolina, Virginia and Tennessee. The company's other restaurant operations include 25 company-owned and 44 franchised restaurants, with a majority of these being Western Steer(R) Steaks, Buffet and Bakery restaurants, Prime Sirloin(R) Buffet, Bakery and Steaks restaurants, and Bennett's(TM) Smokehouse and Saloon restaurants.
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