In an effort to make a score in the food industry, Lasorda Foods Inc.--the spaghetti sauce maker partly owned by Dodger Manager Tommy Lasorda--agreed Tuesday to become a wholly owned subsidiary of Discovery Capital Corp. of Denver.
The transaction is expected to pump up to $4 million into Irvine-based Lasorda Foods over the next year, which company officials said would be used to expand its product line, including adding dry pasta, frozen pizza and Italian salad dressing.
The proposed merger--technically a share exchange outlined in a letter of intent--involves swapping 100% of the issued and outstanding shares of Lasorda Foods for about 85% of the common shares of Discovery Capital.
The transaction is expected to be completed by Dec. 1, said Discovery attorney Bob Merrill.
Lasorda, the Dodger's voluble pasta expert, owns 10% of Lasorda Foods, and he and his wife, Jo, have endorsed its products in public appearances. Early next year he will be featured in television and radio commercials pitching its Italian food products. Lasorda Foods was formed 15 months ago, and this month began shipping its tomato-based sauce to all the major Southland grocery chains. In March, the company moved its headquarters to Orange County, where a staff of six is employed.
The amount of money Discovery Capital, a fledgling venture capital fund whose stock is traded on the pink sheets, will invest in Lasorda Foods ultimately depends on whether two classes of outstanding warrants are exercised as part of the deal.
"With the name recognition and promotion behind Lasorda Foods, everybody's expectation is that (the company) will hit a home run," and the warrants exercised, Merrill said.
Paul W. Deese, Lasorda's chief executive and chairman of the board, said the capital will allow Lasorda Foods to expand its promotion and marketing efforts.
The company recently signed an agreement with United California Brands Inc. of Rialto to manufacture and distribute its products. Lasorda Foods plans next year to move into other major markets, including Chicago, Philadelphia and New York, Deese said.
A dry pasta line is planned for introduction early next year, followed by an Italian salad dressing and frozen pizza later in the year. Eventually, the company hopes to develop a line of pasta-shaped snacks for introduction in 1991, Deese said.