Dean to spin off specialty foods group

01/27/2005

Dean Foods Company (Dallas, Texas) announced Jan. 27 that it intends to pursue a tax-free spin-off of its Specialty Foods Group business to Dean shareholders. The Company also announced that, effective immediately, an experienced management team headed by Sam Reed, former CEO of Keebler Foods Company, has joined the Specialty Foods Group to lead the new company. The new management team has made a cash investment of $10 million in the Specialty unit, representing 1.67% ownership of the new business.

The sell-off will create a publicly traded private label and regionally branded consumer packaged goods company with approximately 1,700 employees and estimated 2005 revenues of over $700 million. In conjunction with the spin-off, Dean Foods is moving its Mocha Mix non-dairy creamer, food service dressings, and Second Nature egg substitute businesses into the Specialty Foods Group from the Dean's Branded Products and Dairy Groups.

The newly created company holds leading positions in the private label pickle and non-dairy powdered coffee creamer markets. Additionally, the firm is a supplier of aseptic cheese sauces, pudding, peppers, dressings, liquid non-dairy coffee creamers and egg substitutes to the retail and foodservice channels. The business lines included in the new company are expected to produce 2005 revenues of over $700 million and operating margins of between approximately 12% and 14%.

The new executive team previously served as the senior management of Keebler Foods Company from 1996 through its sale to Kellogg in 2001. In addition to Sam Reed as chairman and CEO, the management team of the new company includes David Vermylen as president and chief operating officer; E. Nichol McCully as chief financial officer; Thomas O'Neill as general counsel and chief administrative officer; and Harry Walsh as senior vice president of operations.