Sun Capital to score partial exit with Friendly’s sale

Sun Capital Partners is selling a scoop of Friendly’s Ice Cream LLC, the ice cream maker it has owned for nearly nine years.

Dean Foods Co said May 9 that it agreed to buy Friendly’s, which produces packaged ice cream and other frozen deserts, for $155 million.

Dean Foods is acquiring Friendly’s manufacturing and retail business as well as the intellectual property associated with its ice cream business. The company said it would continue to make ice cream out of its plant in Wilbraham, Massachusetts. The transaction is expected to close in the second quarter.

Sun Capital will continue to own and operate Friendly’s Restaurants, which has more than 260 locations in the U.S. The private equity firm is licensing the Friendly’s trademark as part of the deal. It’s unclear how much of Friendly’s business the restaurants comprise.

A Friendly’s spokeswoman declined to comment beyond a release. Sun Capital also declined to comment.

Dean Foods said the acquisition is expected to be immediately accretive and will add 6 cents to earnings per share in 2016.

The sale is a turnaround for Friendly’s. Sun Capital acquired the company in September 2007 for $337.2 million. Four years later, in October 2011, Friendly’s filed for Chapter 11 bankruptcy.

At the time, the ice cream retailer blamed rising prices for cream and high rents for its problems, Reuters reported. Friendly’s listed both liabilities and assets of $100 million to $500 million, Reuters said.

Friendly’s emerged from Chapter 11 in January 2012 and sold itself back to Sun Capital, Reuters reported. The company, with its franchises, currently produces systemwide sales exceeding $500 million, Friendly’s said in a statement.

Which fund Sun Capital used to invest in Friendly’s is unclear. In 2007, Sun Capital collected $6 billion for its fifth fund. Sun Capital Partners V LP, after suffering some early losses, was reduced to $5 billion to accommodate LPs.

The Boca Raton, Florida, PE firm in 2014 closed its sixth fund at $2.1 billion. Performance data for Sun Capital Fund V and VI was not immediately available.

David Iverson of Lazard Middle Market advised Friendly’s Ice Cream on the transaction while Morgan, Lewis & Bockius was the company’s legal adviser.

Rothschild Inc acted as financial adviser to Dean Foods on the transaction, and Gibson Dunn provided legal support.

Executives for Dean Foods could not be reached for comment.

Action Item: To contact Friendly’s email maura.tobias@friendlys.com

This article has been updated to show that Sun Capital declined comment.

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