Food manufacturer TreeHouse Foods Inc (THS.N) is weighing a bid for Michael Foods Group Inc, joining a list of suitors that includes much larger rival Tyson Foods Inc (TSN.N), 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 (GS.N) 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 (BAC.N) on a potential sale, people familiar with the matter told Reuters in December.
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 January 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)