Foremost to Be Acquired by Knudsen : Winn Unit to Pay a Combination of Cash and Notes for Dairy
Winn Enterprises said Thursday that it has signed a definitive agreement to merge its Knudsen Foods Inc. subsidiary with Foremost Dairies Inc., creating one of the largest dairy companies in the West.
Fullerton-based Winn, which is both a specialty foods company and a savings and loan operator, did not release terms for the acquisition of the 65-year-old San Francisco dairy other than to say it will be for a combination of cash and notes.
Foremost was purchased from its parent, then called Foremost-McKesson Inc., in September, 1982, by a group of private investors for $65 million.
The acquisition, which will extend Los Angeles-based Knudsen’s operations into six additional states, is in keeping with Winn’s goal of national expansion.
Combined revenues of the two dairies are expected to exceed $1.2 billion. In the 1984 calendar year, Foremost posted sales of nearly $700 million; Knudsen’s revenues for fiscal 1985 are expected to exceed $500 million.
Once the acquisition is completed, Winn officials said, Foremost’s operations will be integrated with Knudsen’s in Southern California.
‘Consistent With Game Plan’
The companies did not disclose whether the merger would result in personnel cutbacks. Foremost has about 3,400 workers nationwide and Knudsen has nearly 2,200.
Scott Gillespie, president of Drake Capital Securities in Los Angeles, said: “This is very consistent with Winn’s game plan of expanding in the food area. It sounds like a good move.”
Winn also announced Thursday that Dee Bangerter will share the titles of chairman and chief executive with Ted D. Nelson.
Bangerter, now president and chief operating officer, will head Winn’s dairy and specialty foods division, while Nelson will oversee the financial division, principally composed of Salt Lake City-based MountainWest Savings & Loan. Neither was available for comment.
Knudsen’s dairy operations are concentrated in California, with all eight of its distribution centers and seven of its eight plants in the state. Foremost has plants and distribution centers in Arizona, Arkansas, Hawaii, Louisiana, Missouri and Texas, in addition to operations in California.
“You’re looking at a company about to broaden its products and distribution,” said Tony Harris, Winn’s director of investor relations. Foremost officials were not available for comment on the merger.
For financing the acquisition, Winn has “already received formal commitment from a major bank,” Harris said. The proposed acquisition is subject to regulatory approval.
Winn is still recovering from a disastrous third quarter ended last Dec. 31, when it reported net losses of more than $900,000.
Company officials would not project earnings for the fourth quarter, which ends Sunday, and indicated that the figures might not be available until June.
Analysts say there has been a slight easing of the severe price cutting that slashed dairy-company earnings last year.
Scaled Back Plans
In early 1984, Winn withdrew from a preliminary agreement to acquire Kern Foods, a City of Industry-based specialty foods company. Winn blamed the cancellation on Kern.
A week ago, Winn scaled back previously announced plans to acquire a large East Coast real estate developer for $122 million.
Under the revised deal, Winn said it will now buy only 50% of the company, which it hasn’t identified. This will allow Winn to keep the company’s current owners on board, Winn officials said.
