Michael Foods Closes $1.7 Billion Buyout

THL Partners has completed the sale of its majority stake in food supplier Michael Foods to GS Capital Partners for $1.7 billion. THL, which acquired the company in 2003, has retained a 20% ownership position.


Michael Foods, Inc. announced today that its parent, Michael Foods Group, Inc. (formerly M-Foods Holdings, Inc.) closed a previously announced transaction under which its owners, affiliates of Thomas H. Lee Partners, L.P. (“THL”) and certain current and former members of management, sold Michael Foods (“the Company”) to affiliates of GS Capital Partners.  The transaction values Michael Foods at approximately $1.7 billion.

Michael Foods is a multinational producer and distributor of food products to the foodservice, retail and food ingredient markets.  Its principal products are specialty egg products, refrigerated potato products, cheese and other dairy-case products.  THL, which acquired Michael Foods in 2003, will retain an ownership stake of approximately 20% as part of the transaction.

“We look forward to working with Jim Dwyer, the entire management team and THL to further build the Company’s strong product portfolio across all segments,” said Oliver Thym, Managing Director at GS Capital Partners. “We are excited to continue the Company’s demonstrated track record of finding profitable growth opportunities.”

James E. Dwyer, Jr., Chief Executive Officer and President of Michael Foods, said, “The Michael Foods team is excited about our next stage of growth and is looking forward to a great partnership with GS Capital Partners and THL.”

In addition to closing the transaction, Michael Foods is announcing the retirement of its Executive Chairman of the Board of Directors, Gregg A. Ostrander, and its Vice Chairman, John D. Reedy.

Mr. Ostrander became Chairman of the Board in 2001 and has been Executive Chairman since 2008.  He joined Michael Foods in 1993 and has held several senior management positions, including President/Chief Executive Officer from 1994 – 2007.  Mr. Ostrander will remain an investor in and a non-management director of Michael Foods. Under Mr. Ostrander’s leadership, Michael Foods became the largest producer of egg products in North America as well as a leader in the food industry by introducing innovative, value-added food technology and customer solutions.

Mr. Reedy joined the Company in 1988.  He served as the Chief Financial Officer and Executive Vice President of Michael Foods from 2000 – 2007, and Chief Financial Officer and Vice President – Finance from 1988 – 2000, prior to becoming Vice Chairman in 2008.

Regarding the retirements, Mr. Dwyer added, “It’s been terrific working closely with Gregg on managing the business and the sale process.  I am delighted that he will continue to provide ongoing counsel to our team in his new role as a non-management director.  I also want to thank John for his invaluable counsel during the transaction process.  I speak for the entire Michael Foods family in wishing them the very best as they enter the next phase of their lives.”

Mr. Ostrander commented on Mr. Reedy’s retirement, noting, “John has been a valued partner, advisor and a key contributor to the success of Michael Foods in his over 22 years serving as our CFO and more recently as our Vice Chairman.”

“Both Gregg and John have been great partners over the past seven years and proven leaders at Michael Foods for many years prior.  Their contributions to the company’s success have been significant,” commented Anthony J. DiNovi, Co-President of Thomas H. Lee Partners and director of Michael Foods.  “They will be missed in retirement, but they have left their indelible mark on this strong, vibrant company and leave behind a superb management team. This legacy positions Michael Foods for continued success and is one of the reasons why we’re pleased to retain an ownership stake.”

BofA Merrill Lynch acted as financial advisor and Weil, Gotshal & Manges LLP acted as legal advisor to Michael Foods and THL in connection with the transaction.  Goldman, Sachs & Co. acted as a financial advisor and Fried, Frank, Harris, Shriver & Jacobson LLP acted as legal advisor to GS Capital Partners.  Affiliates of Bank of America, Goldman, Sachs & Co. and Barclays Capital provided commitments for the debt financing for the transaction.

About Michael Foods, Inc.

Michael Foods, Inc., based in Minnetonka, MN, is the largest producer of egg products in North America.  Its egg products include Papetti’s® precooked, frozen, liquid, hardcooked and dried products, Abbotsford Farms cage-free and organic egg products, and All Whites® and Better ‘n Eggs®, both sold at retail.  Michael Foods also owns the Simply Potatoes® line of refrigerated potato products, as well as Crystal Farms® branded cheese and refrigerated products.      

About GS Capital Partners

Since 1986, the Goldman Sachs Merchant Banking Division and its predecessor business areas have raised 16 private equity and principal debt investment funds aggregating over $82 billion of capital (including leverage).  GS Capital Partners VI is the current private equity vehicle through which Goldman Sachs conducts its large, privately negotiated, corporate equity investment activities.  A global leader in private corporate equity investing, GS Capital Partners is a family of funds with a focus on large, high quality companies with strong management and funding acquisition or expansion across a range of industries and geographies.  Founded in 1869, Goldman Sachs is a leading global investment banking, securities and investment management firm that provides a wide range of financial services to a substantial and diversified client base that includes corporations, financial institutions, governments and high-net-worth individuals.  For more information, please visit www.gs.com/pia.

About Thomas H. Lee Partners, L.P.

THL is one of the oldest and most successful private equity investment firms in the United States. Since its establishment in 1974, THL has been the preeminent growth buyout firm, raising approximately $22 billion of equity capital, investing in more than 100 businesses with an aggregate purchase price of more than $125 billion, completing over 200 add-on transactions and generating superior returns for its investors.  THL focuses its high value-added strategy on growth businesses, partnering with the best managers in an industry to build great companies through strong organic growth and targeted add-on acquisitions.  Notable transactions sponsored by THL include Aramark, Ceridian, Dunkin’ Brands, Experian, Fidelity National Information Services, HomeSide Lending, Houghton Mifflin, Michael Foods, The Nielsen Company, ProSiebenSat.1, Snapple, Warner Chilcott, Warner Music Group and West Corporation.