GS Capital in talks to sell Michael Foods for around $2.5 bn

GS Capital Partners, an affiliate of Goldman Sachs is in advanced talks to sell US food processor and distributor Michael Foods Group Inc, in a sale that has seen Tyson Foods Inc and Post Holdings Inc emerge as final contenders for a deal worth around $2.5 billion, Reuters reported yesterday, citing people familiar with the matter.

Michael Foods

Michael Foods is evaluating binding bids from Tyson and Post that were submitted earlier this week and is expected to announce a deal in the next two weeks, the report said.

For both Tyson and Post, a takeover of Michael Foods would be their largest deal they would have sealed in recent years.

GS Capital Partners had acquired Minnesota-based Michael Foods in 2010 from private equity firm Thomas H Lee Partners (THL) for $1.7 billion. THL sold 80 per cent but retained a 20 per cent stake. (See: Thomas Lee Partners to sell Michael Foods to GS Capital for $1.7 billion)

Michael Foods produces and distributes egg, cheese, dairy case, and potato products to food service distributors, restaurant chains, food ingredient companies, and the retail grocery market in North America, the Far East, South America, and Europe.

It is the world's largest egg processing company and has brands that include Papetti's, Crystal Farms, AllWhites, Better'n Eggs, Simply Potatoes, MG Waldbaum, Triology, and Inovatech Egg.

It has plants in the US and Canada, and has annual sales of over $1.5 billion. Post Holdings manufactures ready-to-eat cereals, snacks, and active nutrition products in the US and Canada.

Its brands include Honey Bunches of Oats, Pebbles, Post Selects, Great Grains, Spoon Size Shredded Wheat, Post Raisin Bran, Grape-Nuts, Honeycomb, Attune, Uncle Sam, Erewhon, Golden Temple, Peace Cereal, Sweet Home Farm, Willamette Valley Granola Company, Premier Protein, and Joint Juice.

The company was founded in 1895 and is based in St. Louis, Missouri.

Tyson Foods is the second-largest food production company in the Fortune 500, one of the world's largest meat and poultry producer, and according to Forbes one of the 100 largest companies in the US.

The Arkansas-based company makes a wide variety of protein-based and prepared food products at its 123 food processing plants. Tyson Foods has approximately 107,000 employees, who work at more than 300 facilities in the US and throughout the world.