United Biscuits to Buy L.A. Olives Firm

Early California Industries said Wednesday that its olives division--the largest marketer of olives in the United States--will be purchased for $73 million in cash and stock by United Biscuits, a London-based consumer products company.

The Early California olive operations will be taken over by Specialty Brands, a San Francisco-based subsidiary of United Biscuits that makes spices and salad dressings.

The sale of the olives unit is part of an intricate deal announced in July that includes the acquisition by Chairman Gerald D. Murphy of the remaining assets of the Los Angeles-based company.

Murphy intends--through his GDM Acquisition Corp.--to buy out the company’s public stockholders and take the company private.

The olive processing and marketing operatings have accounted for about 25% of the company’s revenue. In its most recent fiscal year ended March 31, Early California lost $9 million on revenue of $239.6 million. Most of the company’s losses were incurred in its troubled rice-milling and bulk-wine operations.

United Biscuits said that $33 million of the total purchase price will be paid in cash. United Biscuits also will give Early California 18.2 million of its shares, or about 6% of the parent company.

The terms of the purchase call for those shares of United Biscuits, valued at $40 million, to be resold immediately, with the cash payable to Early California the day following closure of the sale, according to Gerard R. Thomas, chief financial officer of Early California.

Early California has asked its shareholders to approve the sale of the olive division and the going-private transaction at the company’s annual meeting Oct. 9.

Specialty Brands was founded in San Francisco in 1969 and acquired by United Biscuits in 1978. Its products include the Spice Islands line of gourmet spices, manufactured in Sparks, Nev., and the Marie’s brand of refrigerated salad dressings, which are made at a plant in Thornton, Ill.

Peter Rosow, president and chief executive of Specialty Brands, said his company does not plan any major changes at Early California olives.