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EXHIBIT 99.1
Contact: Mark D. Witmer
Assistant Treasurer
(612) 546-1500
MICHAEL FOODS TO BE ACQUIRED FOR $30.10 PER SHARE BY MANAGEMENT
AND AN INVESTOR GROUP LED BY VESTAR CAPITAL PARTNERS
MINNEAPOLIS, Dec. 21 -- Michael Foods, Inc. (Nasdaq\NMS:MIKL) announced today
that it has signed a definitive merger agreement providing for the acquisition
of the Company for $30.10 per share in cash, by an investor group comprised of a
management group led by the Company's Chairman, President and Chief Executive
Officer Gregg A. Ostrander, the Michael family, and affiliates of two private
equity investment firms, Vestar Capital Partners (Vestar) and Goldner Hawn
Johnson & Morrison (GHJ&M).
Based on the $30.10 price per share, the transaction values the Company at
approximately $800 million, including approximately $200 million of refinanced
debt obligations. Bank of America has committed to provide approximately $600
million of senior and subordinated debt financing to fund the acquisition and
related expenses. Vestar and GHJ&M have committed to provide approximately $165
million of the $215 million equity requirement, with the Michael family and a
management group contributing the balance. In addition, the Michael family has
agreed to vote its current shareholdings of approximately 17.5% of the Company's
stock in favor of the transaction.
Michael Foods, Inc., based in Minneapolis, is the world's largest producer of
value-added egg products, which are sold through both foodservice and retail
distribution channels. The Company is also a leading supplier of processed dairy
products, including aseptic creamers and soft serve ice cream mix, as well as
high quality refrigerated potato products distributed at retail under the Simply
Potatoes(R) and Diner's Choice(R) brand names. During the most recent year,
Michael Foods generated approximately $1.1 billion in net sales.
Current management will continue to run Michael Foods post-transaction under
current C.E.O. Gregg A. Ostrander. Ostrander commented, "I'm very pleased that
we are able to put together a transaction that provides full value to the
shareholders while also benefiting the Company's long-term interests. As a
private company, I believe we will be better able to manage the business in the
interests of Michael Foods' long-term growth plans. I'm also pleased that we
have a strong management group participating in the buyout and am excited to
have Vestar and GHJ&M as our new partners."
A special committee of independent directors negotiated the transaction for
Michael Foods. The full Board of Directors reviewed the transaction and approved
it today. U.S. Bancorp Piper Jaffray and Merrill Lynch & Co. are acting as
financial advisors to Michael Foods and U.S. Bancorp Piper Jaffray delivered an
opinion to the Board that the transaction is fair from a financial point-of-view
to Michael Foods' shareholders. Subject to various fiduciary exceptions, the
merger agreement places certain restrictions on Michael Foods' ability to pursue
other transactions whereby the Company would be acquired. As part of the
agreement, Michael Foods would be required to pay $20 million if the agreement
is terminated under certain circumstances, including a decision by Michael Foods
to accept a more favorable acquisition proposal. The Company expects to file a
Report on Form 8-K with the Securities and Exchange Commission, which will
include a copy of the merger agreement. The transaction is expected to be
completed in late March or early April 2001.
Vestar's Managing Director Jim Kelley said, "We are excited to be partnering
with Gregg Ostrander and his team, as well as the Michael family in this
transaction. Michael Foods is a market leader, with an
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excellent management team that is poised to take advantage of the continuing
growth in dining away from home as a result of increasingly busy lifestyles."
Since early 1999, Vestar has successfully consummated four going-private
transactions in partnership with incumbent managements: Gleason Corp., Sheridan
Healthcare Inc., St. John Knits Inc., and Sunrise Medical Inc. Vestar Capital is
a leading private equity investment management firm with offices in New York
City, Denver and Paris, with approximately $3.5 billion of equity capital under
management.
Jack Morrison, Managing Director of GHJ&M said, "We are pleased to join Vestar
Capital, the Michael Foods management team and the Michael family in this
transaction. Michael Foods and its management, led by Gregg Ostrander, have an
excellent reputation in their markets and in the Twin Cities business community.
Vestar's leadership in this transaction has been exceptional and their sterling
reputation and international scope complement our Midwestern focus."
Goldner Hawn Johnson & Morrison is a private equity investment firm based in
Minneapolis, Minnesota. The firm was founded in 1989 and has successfully
completed more than 20 transactions through four funds, with a total transaction
value in excess of $1 billion.
Certain items in this release are forward-looking statements, which are made in
reliance upon the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Such forward-looking statements are subject to numerous
risks and uncertainties, including the possibility that terms and conditions of
the pending merger, and the merger transaction's closing date, may change due to
unforeseen factors, including, but not limited to, regulatory reviews,
conditions within the capital markets and shareholder response to the proposed
merger.
Contact:
For Vestar Capital Partners and Goldner Hawn Johnson & Morrison: Gene Donati,
Clark & Weinstock Inc., 212-953-2550
12-21-00
