Corporate Dismantling : Specialty Brands to Sell Profitable Olives, Salad Dressing Units to Campbell Soup, Cease Operations

Specialty Brands said Tuesday that it has agreed to sell its Early California olives and Marie’s salad dressing to Campbell Soup Co. and its spice and vinegar lines to McCormick & Co. as part of a corporate dismantling.

When the sales are completed later this year, Specialty Brands will cease operations. Based in San Francisco, Specialty Brands is a subsidiary of United Biscuits, the largest cracker and biscuit producer in Britain. Specialty Brands employs about 550 and had sales of about $140 million last year.

Stuart Greenblatt, a spokesman for Specialty Brands, declined to say why the firm was being sold.

But Roderick Rumreich, an analyst with Moody’s Investors Service, speculated that United Biscuits decided to sell Specialty Brands because it didn’t fit with its cracker and biscuit business. Specialty Brands “had good stand-alone businesses, but they really aren’t related,” he said.

Specialty Brands declined to say what it expects to receive as a result of the sales, but food industry analysts estimated that the businesses will fetch $100 million to $200 million.

The transactions mark the second time that Early California, the nation’s leading black olive processor, has changed hands in less than three years. In late 1985, Specialty Brands acquired the olive firm from Early California Industries of Los Angeles for $73 million.

Specialty Brands got started as an independent firm in 1970, when it acquired the Spice Islands and Marie’s dressings businesses. In 1979, United Biscuits acquired Specialty Brands for about $50 million. Besides Specialty Brands, United Biscuits also owns Keebler, the second-largest cracker and cookie producer in the United States.

Rumreich, the Moody’s analyst, said the Early California olive purchase appeared to be a good one for Campbell Soup. The Camden, N.J.-based food company sells Vlasic pickles, the nation’s best-selling pickle, and recently test-marketed black olives under the Vlasic label. Early California “is a good business, and in most years, it’s profitable,” he said.

Early California accounts for 27% of the nation’s black olive sales, according to Campbell Soup.

Rumreich questioned the Marie’s salad dressing purchase. Although Marie’s is the leading refrigerated salad dressing, its share of the salad dressing market is tiny since most consumers prefer non-refrigerated dressings such as Kraft and Seven Seas. Campbell Soup spokesman James Moran said Marie’s would complement the firm’s fresh lettuce, tomatoes and mushrooms, which are sold under the Campbell’s label.

According to Campbell Soup, Marie’s dressing and Early California were profitable last year and had combined sales of $110 million. For its fiscal year that ended on July 31, 1987, Campbell Soup had earnings of $247 million on sales of $4.5 billion.

Moran said Campbell Soup planned no major changes in olive or salad dressing operations. Early California employs 300 at a plant in Visalia, Calif., and 100 at a plant in Spain. Marie’s employs 69 at a plant in Thornton, Ill.

Moran said, however, that no decision had been made regarding the 125 headquarters employees that are involved in the Marie’s dressing and Early California businesses.

McCormick & Co., the nation’s leading spice processor, said it was too soon to say what its plans are for Specialty Brands’ Spice Islands business, which is sold in specialty food stores. Mac Barrett, a McCormick spokesman, emphasized that the deal wasn’t final. “The price and method of payment are under discussion,” he said.

According to Hunt Valley, Md.-based McCormick, Spice Islands had $30 million in sales in 1987. For its fiscal year that ended on Nov. 30, 1987, McCormick had earnings of $30.6 million on sales of $1.1 billion.

FO