Quaker Oats Plans to Acquire Maker of Rice-A-Roni
Quaker Oats agreed Friday to acquire Golden Grain Macaroni Co., the maker of Rice-A-Roni, for an undisclosed amount.
Golden Grain, which is owned by the DeDomenico family, had $250 million in sales last year. The 50-year-old San Leandro company also makes Noodle-Roni, Golden Grain Pasta products, Ghiradelli Chocolates and Vernell Candy.
William Maguire, a food industry analyst with Merrill Lynch in New York, said he expected Quaker to pay between $210 million and $250 million for Golden Grain. The acquisition would “broaden Quaker’s product lines and give Rice-A-Roni the opportunity to be marketed by a public company with a lot of marketing expertise,” Maguire said.
T. Dennis DeDomenico, Golden Grain’s lawyer and corporate secretary, declined to comment on why the company, which has been courted by a number of would-be purchasers over the years, decided to sell. “We’re still two separate companies, so we’re continuing our policy of not talking about what goes on inside our company,” DeDomenico said in a telephone interview.
William D. Smithburg, Quaker chairman and chief executive, said Golden Grain’s products possess “leadership positions in their markets” and fit well with Quaker’s existing grain-based businesses, such as granola bars, cornmeal and hot cereals. Quaker does not currently market any rice products. Smithburg added that both companies had similar manufacturing, sales and distribution functions.
“Golden Grain’s businesses are strong, well-recognized brand names with excellent prospects for profitable growth,” Smithburg said.
Golden Grain’s sales have increased sharply from $175 million in 1981, largely due to the introduction of new flavors of Rice-A-Roni products and greater market penetration, DeDomenico said. The company’s rice and macaroni products are distributed nationally, but its chocolate and candy is sold only in the West.
The company employs 1,700, including 325 at its headquarters.
Quaker shares closed Friday at $74.50, up $1.25, on the New York Stock Exchange.
Over the last several years, Quaker has sold low-performing chemicals and restaurant businesses and acquired companies related to its foods, pet food and toy businesses. Smithburg said Friday that Quaker, with $3.5 billion in sales last year, would continue to pursue acquisitions in its main businesses.
QUAKER OATS AT A GLANCE CO.
Year ended June 30 In millions 1985 1984 1983 1982 1981 Revenue 3,520 3,344 2,611 2,712 2,600 Net Net income 157 139 119 121 105
Assets: $1,013 million Liabilities: $612 million Shares outstanding: 39.5 million 12-month range NYSE: 47-77 3/8 Friday’s close: 74 1/2, up 1 1/4