Team to Buy Golden State Foods for $400 Million

Golden State Foods, one of California’s largest privately held companies, is being acquired by an investment team headed by supermarket deal maker Ron Burkle for about $400 million.

Irvine-based Golden State racked up sales of $1.5 billion last year, but has only one customer: McDonald’s Corp. The company is McDonald’s second-largest supplier and distributor. It makes beef patties, catsup, mayonnaise, jellies, and salad dressings, and delivers a host of other items for about 2,000 McDonald’s restaurants.

Burkle’s Los Angeles-based Yucaipa Cos. is teaming up with Wetterau Associates of St. Louis to buy Golden State. For Yucaipa, the purchase, which was announced early Saturday and which the parties hope to have completed in April, would represent its first major acquisition outside the supermarket industry.

Golden State “is a very high quality company with very consistent earnings and good management,” Burkle said Monday, adding that he hopes to sell products to other companies and in other industries.

Privately held Golden State does not disclose profits, but Forbes magazine estimates it earned $25 million last year on sales of $1.5 billion. Forbes ranked Golden State as the nation’s 115th-largest private company, based on sales.

Golden State has 12 manufacturing plants and distribution centers in the U.S., Australia and Egypt, and about 2,000 employees, one-third of them in the Southland. The company employs about 35 people at its corporate headquarters in Irvine, and 565 at food processing and distribution plants in City of Industry.

At completion of the deal, Yucaipa would own about 70% of Golden State and Wetterau would own most of the rest, with Golden State management taking a small stake, Burkle said.

Yucaipa owns stakes in Oregon-based Fred Meyer Inc., which is buying Ralphs Grocery Co. of Compton and Hughes Family Markets of Irwindale.

Wetterau Associates is a management company run by former executives of Wetterau Inc., a multibillion-dollar Midwest food wholesaler that was sold to SuperValu Inc. of Minnesota in 1992 for $1.1 billion.

For Golden State’s owners--a management team headed by Chairman and Chief Executive James E. Williams and Butler Capital Corp.--the sale would represent a gain of more than tenfold on their initial investment.

In 1980, a Williams-led management group paid $29 million for Golden State, which was then based in Pasadena and had sales that year of $330 million.