400 Layoffs Expected : Knudsen Completes Foremost Acquisition
Knudsen Foods of Los Angeles on Thursday completed its acquisition of Foremost Dairies for $50 million in cash and notes, creating one of the largest dairy companies in the West. The merger will also result in the layoff of an estimated 400 of Foremost’s 3,000 employees.
During the next three months, Knudsen plans to phase out Foremost’s ice cream facility in Los Angeles, which employs 190 people, as well as its milk production facility in Sacramento, with an estimated work force of 230, company spokesman Anthony Harris said.
About 2,000 Workers
He added that, while the ice cream and milk production will be transferred to Knudsen’s plants in Los Angeles, Fresno and Modesto, only a small percentage of Foremost’s employees will be offered jobs there. Knudsen has about 2,200 workers.
The merger more than doubles Knudsen’s annual revenue, to $1.2 billion, and expands the growth-minded company into seven states, Knudsen Co-Chairman Dee R. Bangerter said. The acquisition also enlarges the company’s California operations from six to 10 plants. Knudsen is a wholly owned subsidiary of Anaheim-based Winn Enterprises.
“We are well positioned to expand our markets into states where neither Foremost nor Knudsen has any appreciable distribution at this time,” Bangerter said.
In Seven States
Foremost has plants and distributions centers in Texas, Arizona, Nevada, Missouri, Arkansas, Louisiana and Hawaii.
Foremost, a 65-year-old, privately held San Francisco dairy, had annual sales of about $730 million in 1984. Knudsen’s estimated revenue for fiscal 1985 is $545.2 million, compared to $438.5 million for the year ended March 31, 1984, according to Harris. The company would not estimate 1985 earnings, but net income for 1984 was $1.3 million.
Company officials said financing for the transaction as well as “a more favorable” refinancing of debt that Winn incurred during its 1983 acquisition of Knudsen will be provided by a subsidiary of Citicorp, Citicorp Industrial Credit.
The financing will consist of a three-year, $129.5-million revolving line of credit and a five-year, $38.5-million term loan.
The company said David F. Greenawalt was named co-chairman of Knudsen and will remain president and chief operating officer.
Allen A. Meyer, formerly president and chief executive of Foremost, will assume the newly created posts of vice chairman of Knudsen and president of Knudsen’s specialty foods group.
Ted Nelson and Bangerter remain co-chairmen of the parent company, Winn Enterprises, which also operates MountainWest Savings & Loan in Salt Lake City.
Bangerter said the company will continue to sell products under both the Knudsen and Foremost labels.