RICHMOND (AP) — Food distributor Performance Food Group Co. said yesterday that it has agreed to be acquired for $1.3 billion by an affiliate of private equity firm Blackstone Group and Wellspring Capital Management, a private investment company.
Performance Food said it will be combined with Vistar Corp., a food-service distributor that Blackstone and Wellspring Capital already control.
The deal would create a larger No. 3 in the food-supplier industry, behind Sysco Corp. and U.S. Foodservice Inc., as there’s “not a lot of direct business overlap” between Vistar and Performance Food, said Performance Food CEO Steven L. Spinner.
He said there would be no job cuts related to the acquisition and Performance Food Group’s headquarters will remain in Richmond, but details have not been worked out regarding who will lead the company and the type of management structure it will have.
Under terms of the agreement, Performance Food shareholders will receive $34.50 in cash for each share of common stock, a premium of about 43 percent over Thursday’s closing price of $24.19. The acquisition is expected to close at the end of the second quarter, Mr. Spinner said.
However, under the terms of the agreement, the company has a 50-day period in which it can still solicit bids from third parties. Blackstone and Wellspring will be required to pay a $40 million termination fee if they are unable to complete the transaction.
Performance Food Group stock climbed $7.56, or 31.3 percent, to $31.75 in trading yesterday.
Performance Food Group markets and distributes food to more than 41,000 hotels, cafeterias, schools, health care facilities and restaurants, including Cracker Barrel, TGI Friday’s, Outback Steakhouse and Ruby Tuesday. The 7,000-employee company serves customers in all 50 states and in 41 countries.
Performance Food started in 1875 as a Richmond food brokerage that delivered canned fruits and vegetables to grocery stores and restaurants in the mid-Atlantic region. It took its current name in 1987.
In November, the company reported third-quarter profit of $12 million, or 46 cents a share, up 33 percent from $12 million, or 35 cents per share in the year-ago period. Analysts polled by Thomson Financial expected earnings of 38 cents per share.
It expects 2007 earnings per share between $1.42 and $1.46, above analyst estimates of $1.38 per share.
Vistar Corp., based in Denver, specializes in Italian foods, vending, office coffee products, and theater markets. It distributes food to more than 33,000 outlets in 50 states.
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