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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):
May 5, 1999 (April 28, 1999)
Suiza Foods Corporation
(Exact name of registrant as specified in its charter)
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Delaware 340-28130 75-2559681
(State or other Jurisdiction of (Commission File Number) (IRS Employer Identification No.)
Incorporation)
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2515 McKinney Avenue, Suite 1200
Dallas, Texas 75201
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code:
(214) 303-3400
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ITEM 5. OTHER EVENTS.
On April 28, 1999, Suiza Foods Corporation, a Delaware corporation,
issued a press release announcing that Suiza and Broughton Foods Company, an
Ohio corporation, have reached an agreement with the U.S. Department of Justice
Antitrust Division to settle the civil antitrust lawsuit brought by the DOJ
against Suiza and Broughton in March 1999 to enjoin Suiza's proposed merger with
Broughton. The proposed settlement will allow Suiza to complete its proposed
merger with Broughton, conditioned upon Suiza's agreement to later sell the
business conducted at Broughton's Southern Belle Dairy based in Pulaski County,
Kentucky. The Press Release announcing the agreement is filed herewith as
Exhibit 99.1.
On April 29, 1999, Suiza issued a press release announcing that it
agreed to sell a majority interest in its U.S. plastic packaging operations to
Consolidated Container Company LLC, a newly formed company to be controlled by
affiliates of Vestar Capital Partners III, L.P., a private equity firm.
Consolidated Container will be formed by combining Suiza's U.S. packaging
operations (Franklin Plastics, Inc. and Plastic Containers, Inc.) with the
operations of Vestar's Reid Plastics Holdings, Inc. The Press Release announcing
the agreement is filed herewith as Exhibit 99.2.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
99.1 Press Release dated April 28, 1999, relating to the
settlement with respect to the Broughton transaction.
99.2 Press Release dated April 29, 1999 relating to the sale of
the U.S. packaging operations to Consolidated Container
Company LLC.
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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: May 5, 1999 SUIZA FOODS CORPORATION
By: /S/ LISA N. TYSON
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Lisa N. Tyson
Vice President
and Assistant General Counsel
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INDEX TO EXHIBITS
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Exhibit
Number Description
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99.1 Press Release dated April 28, 1999 relating to the settlement
with respect to the Broughton transaction.
99.2 Press Release dated April 29, 1999 relating to the sale of the
U.S. packaging operations to Consolidated Container Company LLC.
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EXHIBIT 99.1
APRIL 28, 1999
SUIZA FOODS AND BROUGHTON FOODS AGREE TO SETTLE ANTITRUST
LAWSUIT WITH U.S. DEPARTMENT OF JUSTICE MERGER TO PROCEED
Dallas, Texas and Marietta, Ohio, April 28, 1999 - Suiza Foods Corporation
(NYSE/SZA) and Broughton Foods Company (NASDAQ/MILK) today announced that they
have reached an agreement with the U.S. Department of Justice Antitrust
Division ("DOJ") to settle the civil antitrust lawsuit brought by DOJ against
Suiza and Broughton in March 1999 to enjoin Suiza's proposed merger with
Broughton. The proposed settlement will allow Suiza to complete its proposed
merger with Broughton, conditioned upon Suiza's agreement to later sell the
business conducted at Broughton's Southern Belle Dairy based in Pulaski County,
Kentucky. The proposed settlement is subject to approval by the U.S. District
Judge for the Eastern District of Kentucky London Division where the DOJ's
antitrust lawsuit is currently pending. Before the settlement is approved by
the court, it must be submitted for public comment for a period of 60 days, but
the parties may close the merger prior to final approval of the settlement.
Pursuant to the proposed settlement, Suiza will agree to sell the Southern
Belle Dairy to a buyer acceptable to the DOJ within six months after the
settlement agreement is filed with the court.
As a result of the requirements of the proposed settlement agreement, Suiza and
Broughton have today as of approximately 5:50 p.m. Eastern Daylight time
entered into an amendment to the September 1998 Agreement and Plan of Merger
between Suiza and Broughton. The amendment lowers the consideration to be
received by all Broughton stockholders (other than 5 directors of Broughton and
certain of their affiliates who are parties to a separate stock purchase
agreement with Suiza) from $19 cash per share to $16.50 cash per share.
Pursuant to an amendment to the stock purchase agreement with the 5 Broughton
directors and certain of their affiliates, the 5 Broughton directors and their
affiliates will sell an aggregate of 2 million Broughton shares to Suiza for
$11.25 per share, plus the contingent right to receive $1.25 per share if
certain conditions are satisfied. The amendment to the Agreement and Plan of
Merger is subject to the approval of Broughton's stockholders.
Assuming all conditions to closing are satisfied, Suiza and Broughton
anticipate closing the proposed acquisition on May 31, 1999. Either party may
terminate the amended merger agreement if the transaction is not closed by June
30, 1999.
Certain statements and information in this press release constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements are indicated by
phrases such as "anticipates," "expects" and "intends" or words of similar
meaning or import. Such statements are subject to certain risks, uncertainties,
or assumptions. Should one or more of these risks or uncertainties materialize,
or should underlying assumptions prove incorrect, actual results may vary
materially from those set forth in the applicable forward-looking statement.
Among the key risk factors that may have a direct bearing on whether the
parties' forward-looking statements materialize are (i) risks associated with
the parties' ability to satisfy closing conditions contained in the merger
agreement, including approval of the amended merger agreement by Broughton
stockholders; (ii) risks relating to approval of the proposed settlement with
DOJ by the court. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual results
may vary materially from those set forth in the applicable forward-looking
statement. Any forward-looking statements made or incorporated by reference
herein speak only as of the date of this press release. The parties expressly
disclaim any obligation or undertaking to release publicly any updates or
revisions to any such statements to reflect any change in expectations with
regard thereto or any changes in the events, conditions, or circumstances on
which any such statement is based.
Broughton Media Contact:
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Todd R. Fry
Chief Financial Officer
Office: (740) 373-4121 Ext. 816
Home: (740) 374-2364
Suiza Media Contact:
J. Michael Lewis
Investor Relations
Office: (214) 303-3437
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EXHIBIT 99.2
APRIL 29, 1999
SUIZA FOODS ANNOUNCES SALE OF U.S. PACKAGING OPERATIONS --
NEW COMPANY, CONSOLIDATED CONTAINER, TO BE CONTROLLED BY VESTAR CAPITAL
(April 29, 1999, DALLAS, TEXAS and NEW YORK, NEW YORK) Suiza Foods Corporation
(NYSE: SZA) and Vestar Capital Partners III, L.P. announced today that Suiza has
agreed to sell a majority interest in its U.S. plastic packaging operations to
Consolidated Container Company LLC, a newly formed company to be controlled by
Vestar Capital Partners III, L.P., a private equity firm with offices in New
York and Denver.
Consolidated Container will be formed by combining Suiza's U.S. packaging
operations (Franklin Plastics and Plastic Containers, Inc. (PCI)) with Vestar's
Reid Plastics operations. Vestar will invest an additional $61 million in common
equity. Consolidated Container will assume approximately $135 million of
existing Suiza debt, and will repay to Suiza its intercompany debt and preferred
stock investment of approximately $367 million at closing. Vestar and certain of
its affiliates will own 51% of the new venture. Suiza and the minority interest
shareholders of Franklin Plastics will own a 43%, and a 6% interest,
respectively, in the new venture. The combined entity will have annual sales
estimated to be in excess of $700 million. Suiza's interest in Consolidated
Container will be accounted for under the equity method of accounting.
Consolidated Container's headquarters will be located in Dallas, Texas. Ron
Davis, the current CEO of Reid Plastics and former CEO of Perrier Group of
America, Inc., will serve as non-executive Chairman of the Board. William L.
Estes, currently CEO of Suiza Packaging, will be CEO of the new entity, Peter M.
Bernon, currently Vice Chairman of Suiza Packaging, and B. Joseph Rokus,
currently Chairman of Reid Plastics, each will be a Vice Chairman of the new
entity.
Mr. Estes, who will become CEO of Consolidated Container, stated that "we
believe the combination of Reid Plastics, PCI and Franklin Plastics into
Consolidated Container makes solid business sense in the rapidly changing
plastic packaging industry. Consolidated Container, now a stand-alone company,
combines three state-of-the-art manufacturers with complementary geographic
presence. Consolidated Container will be in a position to focus its combined
resources to provide the market with the best overall packaging value and
product innovation."
In announcing the transaction, Gregg L. Engles, Suiza's Chairman and CEO stated,
"after pursuing a consolidation and integration strategy in the plastics
container category, it is now time to reap the financial benefits for our
shareholders. This transaction represents the culmination of our strategy in the
U.S. plastics packaging industry. In less than two years, we have created a
rigid plastics container business with annualized sales that grew from
approximately $120 million to $540 million, and have greatly enhanced the
business' performance. We expect to redeploy the funds generated by this
transaction into our core dairy and food business, where we continue to see
significant opportunities, and where we intend to strengthen our current
leadership position."
Mr. Engles also noted that, "in addition to retaining a continuing interest in
Consolidated Container, we will receive approximately $367 million in cash and
will have $135 million of existing third party debt assumed in this transaction,
which will return our net investment in Franklin Plastics and PCI. We expect our
remaining interest in Consolidated Container to appreciate materially over time
as this new entity benefits from the material synergies between Reid Plastics
and Suiza's U.S. packaging operations. This transaction marks the end of our
active participation in the U.S. plastic packaging category, and the culmination
of a very successful investment strategy for the benefit of Suiza shareholders."
Suiza Foods plans to use the cash proceeds of the transaction to reduce the
outstanding balance on its revolving line of credit. Those funds may then be
redrawn to fund future acquisitions in Suiza's core dairy
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and food business and for general corporate purposes. Based upon this repayment
of debt, and assuming no reinvestment in dairy or other assets, Suiza expects
the transaction to be approximately $0.10 per share dilutive to earnings per
share for the remainder of 1999, before any restructuring or similar charges
which may be taken by Consolidated Container.
Jim Kelley, Managing Director at Vestar Capital Partners III, L.P., said "we are
excited about this next step in our expansion strategy. Consolidated Container
will be a non-captive company with a lower cost-structure, state-of-the-art
technology, and a national reach, all of which will accrue to the benefit of its
customers. Consolidated Container will be in position to expand sales and
operations significantly to current and new customers nationwide."
The transaction has been approved by the respective Boards of Directors of the
constituent companies and is subject to customary conditions, including the
expiration of the Hart-Scott-Rodino waiting period, receipt of acceptable
financing for Consolidated Container and receipt of certain third party
consents. Suiza and Vestar are currently analyzing whether an offer will be
made, prior to the closing of the transaction, to purchase the 10% Senior
Secured Notes of PCI currently outstanding. If an offer to purchase the Notes is
made, the successful conclusion of the tender offer will not be a condition to
the closing of the transaction. The closing is expected to occur on or about
July 1, 1999.
Consolidated Container will have over 70 manufacturing sites and will provide
complete geographic coverage of the United States with a broad portfolio of
products including single layer high density polyethylene bottles for the dairy,
water and fruit drink category, multi-layer barrier bottles in both high density
and PET for packaged consumer goods, and polycarbonate bottles for the home and
office water market.
Suiza Foods is a Dallas-based company with leading positions in the dairy and
consumer goods packaging industries. Its principal holdings are in fluid dairy
processing, refrigerated, shelf-stable and frozen dairy case products, and
consumer goods packaging. After the closing of the transaction, Suiza Foods will
continue to own its Puerto Rico plastics operations as well as its European
metal can and flexible film manufacturing businesses.
Vestar Capital Partners is a leading investment firm that manages more than $1
billion in equity capital and specializes in management buyouts and growth
capital investments. Vestar invests, as partners with management teams, in
high-quality, middle market companies. Since its founding in 1988, Vestar has
completed approximately 30 transactions with a total value in excess of $5
billion. Vestar has been a leading or majority shareholder in such well-known
companies as Celestial Seasonings, Inc., Prestone Products Corporation,
Westinghouse Air Brake Company, and Remington Products Company.
Suiza Foods will hold a conference call April 30, 1999 at 9:30 a.m. EDT to
discuss this transaction. You may listen live to the call at the following
Internet address: http://www.suizafoods.com. You will need Real Audio software,
which may be downloaded by going to the Conference Call page of our web site
prior to the call. It takes approximately 15 minutes to download the software.
Replays will be available at the same address for a limited time period.
Certain statements and information in this press release constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements may be indicated by
phrases such as "believes," "anticipates," "expects," "intends," "foresees,"
"projects," "forecasts" or words of similar meaning or import. Such statements
are subject to certain risks, uncertainties, or assumptions. Should one or more
of these risks or uncertainties materialize, or should underlying assumptions
prove incorrect, actual results may vary materially from those set forth in the
applicable forward-looking statement. Among the key factors that may have a
direct bearing on the Company's results and financial condition, including the
Company's results from its investment in Consolidated Container are (i) risks
associated with the acquisition strategy of the Company and Consolidated
Container, including their respective abilities to integrate the operations of
its acquired businesses and realize operating efficiencies and expected
synergies, (ii) risks relating to the leverage position of the Company and
Consolidated Container, (iii) risks associated with intense competition in the
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respective industries of the Company and Consolidated Container, (iv) the impact
of governmental regulations affecting the respective industries of the Company
and Consolidated Container, (v) the demand for consumer products, particularly
plastic packaged products and (vi) other risks described in the Company's Annual
Report on Form 10-K. Any forward-looking statements made or incorporated by
reference herein speak only to the date of this press release. The Company
expressly disclaims any obligation or undertaking to release publicly any
updates or revisions to any such statements to reflect any change in its
expectations with regard thereto or any changes in events, conditions, or
circumstances on which any such statement is based.
CONTACT:
SUIZA FOODS CORPORATION
J. Michael Lewis
Vice President, Treasurer
(214) 303 3437
Barry Fromberg
Executive Vice President, Chief Financial Officer
(214) 303 3400
VESTAR CAPITAL PARTNERS III, L.P.
Gene Donati, Clark & Weinstock
(212) 953-2550
