(Adds details on TreeHouse, updates stock price)
By Olivia Oran and Greg Roumeliotis
March 19 Food manufacturer TreeHouse Foods Inc
is weighing a bid for Michael Foods Group Inc, joining a
list of suitors that includes much larger rival Tyson Foods Inc
, people familiar with the matter said on Wednesday.
A deal, which could be between $2 billion and $2.5 billion,
would be a big bite for TreeHouse, which has a market value of
around $2.7 billion.
Michael Foods, the egg and dairy products producer owned by
Goldman Sachs Group Inc's private equity unit, is in the
advanced stage of finding a buyer. People familiar with the
process have previously identified Tyson as the most likely
buyer. It is not clear how serious TreeHouse might be about
possibly acquiring Michael Foods.
TreeHouse, which says it is the largest manufacturer of
pickles and non-dairy powdered creamer in the United States,
also makes soups, salad dressings, sauces and cereals. It
supplies food products to supermarkets for resale under the
retailers' own labels, as well as to foodservice distributors
and restaurant chains.
The company has said publicly this year it is looking at
expanding its non-branded food business.
Other parties in talks with Michael Foods include private
equity firms Golden Gate Capital and Oaktree Capital Management,
the people said. Oaktree is working with its portfolio company
AdvancePierre Foods, a protein supplier to schools and
restaurants, added the sources.
TreeHouse shares rose as much as 4 percent on Wednesday on
news of the possible bid for Michael Foods. The shares were
still up 2.3 percent at $75.24 in afternoon trading on the New
York Stock Exchange.
TreeHouse, Michael Foods and Golden Gate declined to
comment. Goldman Sachs and Oaktree could not immediately be
reached for comment.
Second-round bids for Michael Foods are due in early April,
said the people, who asked not to be identified because the
matter is confidential.
Michael Foods is working with Goldman Sachs' investment
banking unit and Bank of America Merrill Lynch on a
potential sale, people familiar with the matter told Reuters in
Tyson, one of the world's largest chicken processors, is
evaluating an offer for Michael Foods, betting on synergies on
the poultry side of the business as both companies raise
chickens, Reuters first reported on Jan. 16.
Minnetonka, Minnesota-based Michael Foods produces and
distributes products including specialty eggs, refrigerated
potatoes, cheese and other dairy products.
Goldman Sachs Capital Partners bought Michael Foods from
private equity firm Thomas H. Lee Partners LP in 2010 for around
$1.7 billion. Thomas H. Lee retained an ownership stake of about
20 percent as part of the transaction.
(Reporting by Olivia Oran and Greg Roumeliotis in New York;
additional reporting by Soyoung Kim in New York; editing by Phil
Berlowitz and Matthew Lewis)