<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED):
SEPTEMBER 29, 1997 (SEPTEMBER 29, 1997)
SUIZA FOODS CORPORATION
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 340-28130 75-2559681
- --------------- ------------------------ -------------------
(STATE OR OTHER (COMMISSION FILE NUMBER) (IRS EMPLOYER
JURISDICTION OF IDENTIFICATION NO.)
INCORPORATION)
3811 TURTLE CREEK BLVD., SUITE 1300
DALLAS, TEXAS 75219
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(214) 528-9922
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ITEM 5. OTHER EVENTS.
(a) On September 29, 1997, Suiza Foods Corporation ("Suiza") and
The Morningstar Group Inc. ("Morningstar") announced that they had signed a
definitive agreement to merge (the "Merger"). The Press Release announcing the
signing is filed herewith as Exhibit 99.1.
(b) On September 29, 1997, Suiza and Morningstar will hold an
investor and analyst meeting relating to the Merger. Filed herewith as Exhibit
99.2 are the presentation materials to be used at the meeting (the "Presentation
Materials").
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
99.1 Press Release dated September 29, 1997, relating to the
Merger.
99.2 Presentation Materials to be used at an investor and analyst
meeting relating to the Merger.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: September 29, 1997 SUIZA FOODS CORPORATION
By: /s/ Tracy L. Noll
-----------------------------
Tracy L. Noll
Vice President and Chief
Financial Officer
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
99.1 Press Release dated September 29, 1997, relating to the Merger.
99.2 Presentation Materials to be used at an investor and analyst
meeting relating to the Merger.
</TABLE>
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EXHIBIT 99.1
FOR: SUIZA FOODS CORPORATION
CONTACT: Tracy Noll
Chief Financial Officer
(214) 528-0939
Morgen-Walke Associates:
Re: Suiza Foods Corporation
June Filingeri, John Blackwell
Media contact: Miriam Adler, Erika Brown
(212) 850-5600
FOR: THE MORNINGSTAR GROUP
CONTACT: Darron Ash
Chief Financial Officer
(214) 360-4732
Kekst and Company
Re: The Morningstar Group Inc.
Ron Winnick
(212) 521-4842
SUIZA FOODS AND THE MORNINGSTAR GROUP
SIGN DEFINITIVE MERGER AGREEMENT
DALLAS, TX, September 29, 1997 -- Suiza Foods Corporation (NYSE:SZA) and
The Morningstar Group Inc. (NASDAQ:MSTR) announced today that they have entered
into a definitive merger agreement. Under the terms of the agreement,
shareholders of The Morningstar Group will receive 0.85 shares of Suiza stock
for each of the approximately 14.8 million Morningstar shares outstanding and
0.85 Suiza stock options for each of the 3.5 million Morningstar stock options
outstanding. Suiza stock closed at $53.938 on Friday, September 26. The
exchange will result in the issuance of approximately 12.5 million shares of
Suiza stock and approximately 2.9 million Suiza stock options at an average
exercise price of approximately $18.00. Suiza believes the transaction will be
accretive in 1998. The transaction, with a total value of approximately $960
million, includes the assumption of approximately $176 million of Morningstar
debt. It is expected that the transaction will be tax free to The Morningstar
Group shareholders and will be accounted for as a pooling-of-interests.
-MORE-
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SUIZA FOODS ANNOUNCES MERGER WITH THE MORNINGSTAR GROUP
- -PAGE 2-
Gregg L. Engles, Suiza's Chairman and Chief Executive Officer,
commented: "The merger of Suiza Foods and The Morningstar Group brings together
two of the fastest growing food companies in the U.S. to create the nation's
largest dairy company. The combination will enable both companies to realize
their strategic plans more rapidly and effectively as we bring together our
manufacturing and distribution capabilities and develop even more efficient
ways to service our various distribution channels. Our combined presence in
both the fluid milk and value added sections of the dairy case, together with
one of the most successful and innovative portfolios of dairy case brands,
should allow us to more efficiently service the needs of our customers and
provide the highest quality portfolio of products to the consumer. The merger
will also substantially enhance our cash flow, materially expand our
borrowing capacity and increase the float and liquidity of our common stock."
C. Dean Metropoulos, The Morningstar Group's Chairman and Chief
Executive Officer, added: "Joining with Suiza Foods provides Morningstar with a
broader range of opportunities to expand its network of national branded
products by increasing our manufacturing and distribution platforms, offering
substantial cost synergies and creating the potential for a wider variety of
acquisitions. Morningstar and Suiza have a similar vision of creating one of
the strongest, most efficient companies in the food industry through
consolidating acquisitions and improved operating efficiencies. Both companies
are focused on that goal and their complementary product lines will make
possible opportunities previously not available. We could not have selected a
better partner for realizing the potential of our business."
Gregg Engles continued: "The combination of Morningstar's national
manufacturing and distribution infrastructure for value added refrigerated
dairy case products and Suiza's growing network of regional fluid milk
companies is powerful. With respect to large accounts, Morningstar's ability
to centrally manufacture and distribute value added products through the
grocery warehouse system will allow our regional dairies to greatly simplify
certain aspects of their manufacturing and distribution systems. With respect
to smaller accounts not well served by centralized distribution, Suiza's
growing store door delivery system will enable Morningstar to reach a
substantially wider audience with its highly profitable branded and other value
added
-MORE-
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SUIZA FOODS ANNOUNCES MERGER WITH THE MORNINGSTAR GROUP
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products. The addition of Morningstar should make each of our future regional
dairy acquisitions more accretive because of the strategic synergies.
Moreover, Morningstar's brand management, marketing and distribution
infrastructure will greatly expand the universe of potential acquisition
candidates for Suiza. We look forward to joining hands with Morningstar in
forging the finest dairy, specialty foods and packaged ice company in the
country."
Pursuant to the terms of the agreement, Suiza's board of directors will
elect two nominees of The Morningstar Group to its board. Gregg Engles will
remain Chairman and Chief Executive Officer of Suiza Foods. Hollis Jones,
Morningstar's current President and Chief Operating Officer, will become
President of Suiza Foods. Bill Brick, Suiza's President and Chief Operating
Officer, will become President and Chief Operating Officer of the Company's
Fluid Dairy Group. Tracy Noll, Suiza's Chief Financial Officer, will become
Chief Financial and Administrative Officer of Suiza Foods.
The combined Company expects to achieve approximately $10 million of
immediate savings from eliminating redundant administrative and financial costs.
The Company also expects to realize significant additional cost savings from
combined purchasing and rationalized manufacturing and distribution within
twelve months of closing. At closing, Suiza expects to recognize a one-time
charge of approximately $25 million for merger related costs.
The definitive merger agreement has been approved by the Boards of
Directors of Suiza Foods and The Morningstar Group. The proposed transaction
is subject to, among other things, approval by the shareholders of both
companies, successful completion of regulatory review under the
Hart-Scott-Rodino Act, and verification that the merger is eligible for
treatment as a tax-free exchange and pooling-of-interests.
Donaldson, Lufkin & Jenrette Securities Corporation advised and
rendered a fairness opinion for Suiza Foods Corporation. Goldman, Sachs & Co.
advised and rendered a fairness opinion for The Morningstar Group Inc.
-MORE-
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SUIZA FOODS ANNOUNCES MERGER WITH THE MORNINGSTAR GROUP
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Suiza Foods is a Dallas-based consolidator of distribution oriented
food businesses. Its principal holdings are in the dairy processing, packaged
ice and plastic container industries and include Suiza Dairy and the Garrido
Coffee Company in Puerto Rico, Velda Farms Dairy in Florida, Swiss Dairy in
California, Model Dairy in Nevada, Dairy Fresh in North Carolina, Country Delite
Farms in Tennessee, Garelick Farms in New England, Franklin Plastics, and Reddy
Ice, the largest packaged ice company in the United States. On September 19,
1997, Suiza announced that it had entered into a definitive merger agreement
with Country Fresh, Inc., a $350 million fluid milk, juice and ice cream
processor headquartered in Grand Rapids, Michigan. Excluding the Morningstar
merger, pro forma 1996 Suiza revenues, assuming the completion of the Country
Fresh merger, approximate $1.5 billion.
Morningstar is a nationally prominent manufacturer, distributor and
marketer of refrigerated, shelf-stable and frozen food products. Its
established branded products include: International Delight(R), a
gourmet-flavored and non-flavored coffee creamer; Second Nature(R), a
refrigerated no-cholesterol egg substitute; Mocha Mix(R) non-dairy coffee
creamers; Naturally Yours(TM), fat-free and regular, real dairy sour cream, Jon
Donaire(R) cheesecakes and desserts, Wacky Willie(TM) flavored shakes, and, in
the western two-thirds of the United States, Lactaid(R), lactose-free and
lactose-reduced milks produced under license from McNeil Consumer Products
Company, a subsidiary of Johnson & Johnson. Morningstar also specializes in
providing private label refrigerated, shelf-stable and frozen products to
grocery warehouses, bakery/industrial companies, club stores and dairy
companies. Morningstar recorded pro forma revenues of approximately $528
million for 1996.
Statements in this press release other than statements of historical
fact may constitute "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. These forward-looking
statements, as well as Suiza's, Morningstar's and the combined company's future
financial condition and results, are subject to inherent risks and uncertainties
and actual results may differ materially from the results discussed in these
forward looking statements. Factors that might cause such a difference include,
but are not limited to: (i) a lack of suitable acquisition candidates at
acceptable prices and other limitations on Suiza's ability to
-MORE-
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SUIZA FOODS ANNOUNCES MERGER WITH THE MORNINGSTAR GROUP
PAGE 5
pursue its acquisition strategy, (ii) significant competition, (iii) fluctuating
raw material costs, (iv) limitations arising from Suiza's substantial
indebtedness, (v) expected cost savings from the merger that cannot be fully
realized or realized within the expected time frame, (vi) revenues following the
merger are lower than expected, (vii) costs or difficulties related to
integrating the businesses of Suiza and Morningstar are greater than expected,
(viii) general economic conditions are less favorable than expected, and (ix)
legislative or regulatory changes adversely effect the business of the combined
company. Additional information concerning these and other risk factors are
contained in each of Suiza's and Morningstar's latest Annual Report's on Form
10-K and in each of Suiza's and Morningstar's other recent filings with the
Securities and Exchange Commission (SEC), copies of which are available from the
SEC and can be obtained from Suiza or Morningstar, respectively, upon request.
###
<PAGE> 1
EXHIBIT 99.2
[SUIZA FOODS LOGO] [THE MORNINGSTAR GROUP LOGO]
ANALYST AND INVESTOR PRESENTATION
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TRANSACTION SUMMARY
<TABLE>
<S> <C>
Terms: 0.85 Shares of Suiza Foods for Each
Share of Morningstar
Structure: Tax-free, Pooling of Interests
Transaction Value: Approximately $960 million
Implied Price Per Share: $45.85 per share (9/26/97 close)
Suiza Shares Issued: 12.5 million
Suiza Options Issued: 2.9 million
Suiza Shares Outstanding (Post): 30.2 million
Morningstar Ownership of Suiza (Post): Approximately 43%
Equity Market Capitalization (Post): $1.6 billion
Expected Closing: Year-End 1997
Financial Impact: Accretive to 1998 EPS
</TABLE>
[SUIZA FOODS LOGO] [THE MORNINGSTAR GROUP LOGO]
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MERGER CREATES THE LEADER IN THE DAIRY CASE
o Leading U.S. Manufacturer and Marketer of Products in the
Dairy Case
o Significantly Expands Product Line and Distribution Channels
o Coverage of All Relevant Distribution Channels
o Leverages Nationwide Manufacturing and Distribution Network
o Enhances Internal Growth and Acquisition Opportunities
o Led by Experienced, Focused and Aggressive Management Team
o Increases Financial Strength and Earning Power
[SUIZA FOODS LOGO] [THE MORNINGSTAR GROUP LOGO]
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MERGER CREATES DYNAMIC, LEADING FOOD COMPANY
SUIZA
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o $1.5 Billion 1996 Pro Forma Revenues
o Successful Consolidator of Distribution-Oriented Food
Businesses
o Leading Fluid Milk Company
o Extensive DSD Distribution
o Strong Regional Businesses with Significant Market Position
o Impressive Record of Identifying, Acquiring and Integrating
Accretive Transactions
o Experienced Entrepreneurial Management Team
MORNINGSTAR
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o $528 Million 1996 Pro Forma Revenues
o Only National Manufacturer and Distributor of Value-Added
Dairy Products
o Broad Range of Branded and Specialty Refrigerated Products
o High Margin Niche Products with Strong Market Position and
Growth Prospects
o Distributes to Over 160,000 Outlets in all 50 States and 20
Foreign Countries
o Flexible Infrastructure for Future Growth
[SUIZA FOODS LOGO] [THE MORNINGSTAR GROUP LOGO]
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SUIZA'S STRONG REGIONAL AND EXPANDING PORTFOLIO OF BUSINESSES
[MAP]
[SUIZA FOODS LOGO] [THE MORNINGSTAR GROUP LOGO]
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ARE COMPLEMENTED BY MORNINGSTAR'S NATIONWIDE NETWORK
[MAP]
[SUIZA FOODS LOGO] [THE MORNINGSTAR GROUP LOGO]
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MERGER ENHANCES SUIZA'S GROWTH STRATEGY
o Enhances Suiza's Ability to Consolidate Fluid Milk Industry
o Morningstar Brings Growth Through New Value-Added and Branded
Product Lines
o Cross-selling Opportunities Increase Penetration in Dairy Case
o Creates Significant Manufacturing and Distribution
Efficiencies
o Enhances Earnings as New Acquisitions Have More Synergy
Potential
[SUIZA FOODS LOGO] [THE MORNINGSTAR GROUP LOGO]
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MERGER FITS ATTRACTIVE INDUSTRY DYNAMICS AND TRENDS
o Accelerating Consolidation in Dairy Industry Led by Suiza
[FLUID MILK SALES CHART]
(1) Management estimates of U.S. Dairy Industry.
[SUIZA FOODS LOGO] [THE MORNINGSTAR GROUP LOGO]
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MERGER FITS ATTRACTIVE INDUSTRY DYNAMICS AND TRENDS
o $23 Billion Wholesale Fluid Milk Market is Highly Fragmented
and Regional(1)
o Market Segmenting into:
- High Volume Fluid DSD Operations
- Value-added, Longer Shelf Life Corrugated Operations
o More Efficient "One-Stop Shopping" for Dairy Case
--------------------------------------------------------------
Suiza Will Significantly Increase Its Presence in "Dairy Case"
--------------------------------------------------------------
(1) Source: Milk Industry Foundation
[SUIZA FOODS LOGO] [THE MORNINGSTAR GROUP LOGO]
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EXPANSIVE COVERAGE OF THE DAIRY CASE
Aerosol
Cottage Cheese
Eggs
Orange Juice
Non-Dairy Creamers
Sour Cream
Egg Substitute
Half and Half
Butter
Lactose-Reduced Milk
Whipping Cream
Yogurt
Fluid Milk
[SUIZA FOODS LOGO] [THE MORNINGSTAR GROUP LOGO]
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SUIZA WILL SELL THROUGH EVERY RELEVANT DISTRIBUTION CHANNEL
<TABLE>
<CAPTION>
FOOD CHANNEL COMBINED COVERAGE # OF OUTLETS SERVED
------------ ----------------- -------------------
<S> <C> <C>
Supermarkets X 30,000
Convenience Stores X 30,000
Food Service X 100,000
Club Stores X 700
In-store Bakeries X 30,000
</TABLE>
[SUIZA FOODS LOGO] [THE MORNINGSTAR GROUP LOGO]
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ENHANCED INTERNAL GROWTH OPPORTUNITIES
o Morningstar's Product Line has Substantial Internal Growth
Potential
o Morningstar Has High Growth Brands in Attractive Categories
o Suiza Brings High Growth Plastics Business
o Merger Creates Revenue Enhancement Opportunities:
- Cross-selling Through Established Relationships
- Expanded Distribution Channels
[SUIZA FOODS LOGO] [THE MORNINGSTAR GROUP LOGO]
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MERGER ENHANCES ACQUISITION RELATED GROWTH STRATEGY
o Suiza Will Continue to:
- Acquire Strong Regional Dairies in New Markets
- Acquire Less Efficient Dairies in Existing Markets
o The Merger Will Also Enable Suiza to:
- Acquire Complimentary Refrigerated, Frozen and Dairy-Related
Food Companies
- Enhance Earnings as New Acquisitions Have More Synergy
Potential
- Consolidate Manufacturing and Distribution within Existing
Markets
o Substantially Increases Borrowing Capacity and Financial Flexibility
[SUIZA FOODS LOGO] [THE MORNINGSTAR GROUP LOGO]
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EXPERIENCED, AGGRESSIVE AND DEEP MANAGEMENT
[ORGANIZATIONAL CHART]
o Combination of Two Highly Successful and Focused Management
Teams
o Optimal Mix of Operational Experience, Strategic Vision, and
Dealmaking Skills
o Management Will Have Significant Ownership in the Combined
Company
[SUIZA FOODS LOGO] [THE MORNINGSTAR GROUP LOGO]
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STRONG FINANCIAL PERFORMANCE FOR SUIZA
($ in millions, except per share data)
<TABLE>
<CAPTION>
[REVENUES CHART] [EPS(1) CHART]
<S> <C> <C> <C>
1994 $341.1 1994 $0.95
1995 $430.5 1995 $1.30
1996 $520.9 1996 $1.45
PF 1996(2) $1494.5 PF 1996(2) $2.41
</TABLE>
(1) Before extraordinary losses, non-recurring merger and other costs and sale
of tax credits
(2) Pro Forma for completed acquisitions per Form 8-K and adjusted for pending
Country Fresh Acquisition
[SUIZA FOODS LOGO] [THE MORNINGSTAR GROUP LOGO]
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STRONG FINANCIAL PERFORMANCE FOR MORNINGSTAR
($ in millions, except per share data)
<TABLE>
<CAPTION>
[REVENUES CHART] [EPS(1) CHART]
<S> <C> <C> <C>
1994 $292.3 1994 $0.62
1995 $304.7 1995 $0.74
1996 $394.3 1996 $0.96
PF 1996(2) $528.1 PF 1996(2) $1.21
</TABLE>
(1) Earnings from continuing operations
(2) Pro Forma for acquisition of Presto Foods Products
[SUIZA FOODS LOGO] [THE MORNINGSTAR GROUP LOGO]
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IMPRESSIVE VALUE CREATION
[GRAPH OF SUIZA AND MORNINGSTAR STOCK PRICES VS S&P 500 FROM SUIZA'S IPO DATE]
[SUIZA FOODS LOGO] [THE MORNINGSTAR GROUP LOGO]
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MERGER WILL BE ACCRETIVE IN FISCAL 1998
o Combined Pro Forma 1996 Revenues of $2 Billion
o Substantial Synergies
- $10 Million of Immediate Cost Savings from Redundant
Administrative Costs and Financing Costs
- Additional Near-term Savings from Purchasing, Transportation and
Manufacturing
- Revenue Enhancements
o Substantially Increase Borrowing Capacity
o One-Time (1997) Merger and Related Costs of Approximately $25 Million
[SUIZA FOODS LOGO] [THE MORNINGSTAR GROUP LOGO]
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POWERFUL FIT TO CREATE DYNAMIC, LEADING FOOD COMPANY
o Accretive Transaction
o Formidable National Presence in the Dairy Case
o One of the Fastest Growing Mid-Cap Food Companies in the United States
o Extensive Product Line Sold Through Multiple Channels
o Unmatched Nationwide Manufacturing and Distribution Network
o Substantial and Balanced Growth Opportunities through Acquisitions and
Organic Growth
o Experienced, Focused and Aggressive Management
o Strong Financial Position to Execute Growth Strategy
[SUIZA FOODS LOGO] [THE MORNINGSTAR GROUP LOGO]
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