Duo Purchases Golden State Foods
Golden State Foods, one of California’s largest privately held companies, is being acquired by an investment group 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, making beef patties, catsup, mayonnaise, jelly and salad dressing, as well as delivering a host of other items for 2,000 McDonald’s restaurants.
Burkle’s Los Angeles-based Yucaipa Cos. is teaming up with Wetterau Associates LLC of St. Louis to buy Golden State. For Yucaipa, the purchase, which was announced early Saturday, represents 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 doesn’t disclose profits, but Forbes magazine estimates it earned $25 million last year. Forbes ranked Golden State as the nation’s 115th-largest private company, based on its $1.5 billion in sales.
Golden State has 12 manufacturing plants and distribution centers in the United States, 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 Industry.
When completed, Yucaipa will own about 70% of Golden State. Wetterau will own most of the rest, with Golden State management taking a small stake, Burkle said.
Yucaipa owns a 10% stake in Oregon-based Fred Meyer Inc., which is buying Ralphs Grocery Co. of Compton and Hughes Family Markets of Irwindale. Fred Meyer also owns the Smitty’s chain in Arizona and Smith’s Food & Drug in the Rocky Mountain and Southwestern states. Yucaipa also has a 30% stake in Chicago-based Dominick’s Finer Foods.
Wetterau Associates is a management company run by former executives of Wetterau Inc., a multibillion-dollar Midwest food wholesaler that was sold to Minnesota-based SuperValu Inc. 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 represents 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 annual sales of $330 million.
Williams said the sale to Yucaipa stems from a desire to “provide for an orderly succession” at the company. Burkle said that Williams has agreed to stay on for at least a year, but that a number of senior Golden State executives will be retiring.
Williams said Golden State hired New York investment banker Lazard Freres & Co. last year to analyze its options, and that the company was put up for sale about four months ago.
Golden State was founded in 1950 by William Moore as a hotel, restaurant and institutional food supply company. Moore, who was a friend of McDonald’s founder Ray Kroc, dropped all of his other customers in 1972 to serve only McDonald’s.
