$16.4-Million Transaction Awaits Stockholder OK : Kraft Inc. Purchasing Keeler Foods of Santa Ana

Keeler Foods Inc. of Santa Ana, the state’s largest independent food-products distributor, said Monday that it is being bought for $16.4 million by Kraft Inc., which is driving to strengthen its position in the Southland market.

Once the sale is final, Keeler--Kraft’s second acquisition in Southern California so far this summer--will become a subsidiary of the Illinois-based company’s food service group. Keeler will maintain its Santa Ana warehouse and headquarters, according to William McGaughey, chairman, president and chief executive of Distribuco, the holding company that owns Keeler.

The sale of Keeler is pending approval by Distribuco stockholders, who will vote on the agreement at a special meeting in October. McGaughey said approval virtually is guaranteed because 55% of the outstanding 1.2 million shares of Distribuco common stock are owned by himself, a trust based in Memphis, Tenn., and a Stockton food processor, and the three majority owners approve of the sale. About 700 others share in the remaining 45% of the company’s common stock.

According to terms of the sale agreement, Kraft--a subsidiary of Dart and Kraft Inc.--will pay Distribuco shareholders $15.1 million in cash and deliver a two-year note for $1.3 million. That translates into a price per share of between $7.50 and $8.50, depending on how much Distribuco can pull in for some of its remaining assets. At the end of Monday’s trading on the over-the-counter market, Distribuco closed at $7.75, up $1.375. In the last 15 years, the company’s stock had never traded for more than $6.875 per share.

Keeler, founded in 1946, distributes a full line of fresh and frozen foods and kitchen and janitorial supplies to Southern California restaurants, caterers and other clients that serve prepared meals. Among its 3,000 customers are Del Taco’s Mexican-American restaurants, Hilton hotels and Wendy’s fast-food restaurants.

Distribuco, which bought Keeler in 1974, currently has no other interests. All of its officers also hold positions in Keeler.

Distribuco effectively will be eliminated after the takeover, although Kraft plans to keep all of its executives, according to officials for both companies. McGaughey said he will retain his dual title as Keeler’s president and chief executive.

Santa Ana-based Distribuco reported net income of $463,000 for its 1986 fiscal year ended March 31. Revenue was $83.9 million. Kraft, one of the nation’s largest food-service distributors, said its annual revenue from food-products distribution is about $900 million.

McGaughey said he believes that Keeler will keep all of the 200 employees currently working at the Santa Ana facility.

Kraft, known primarily for its Miracle Whip, Sealtest, Breyer’s and Philadelphia brand food products, had only one food services distribution center in Southern California, located in Carson. That center serves primarily the Los Angeles area.

In June, however, the company bought Moceri Produce Inc., San Diego’s biggest distributor of food services products, with revenue of $57 million for its most recent fiscal year.