Encino-based Interfoods Consolidated Inc. on Tuesday decided to move to the Internet with the acquisition of Sitestar Corp., an Internet services company, and said it may leave behind its specialty Mexican food line and the food manufacturing business.
"The food industry is a stable, mature, mundane industry, and we were doing well," said Eric Manlunas, chairman, president and chief executive of Interfoods. "But the Internet is a high-growth industry, and it's a little sexier and hotter than the food business.
"It's the main attraction," he added.
Interfoods, a 56-year-old wholesaler and retailer of specialty gourmet foods with about $10 million in annual sales, purchased privately held Sitestar of Annapolis, Md., for an undisclosed amount.
Manlunas said the acquisition is Interfoods' first foray into the burgeoning, lucrative world of the Web, and that the new company will become the base for a diversified e-commerce holding company.
Manlunas also hopes to increase shareholder value by creating a mix of Internet companies, he said. On Tuesday, Interfoods shares fell 6 cents to close at $3.44 in over-the-counter trading.
"We want Sitestar to be the platform that we build off of to build a strong e-commerce business," he said.
The fate of Interfoods' food business is still undecided, Manlunas said. The company, which produces frozen burritos along with cookies, candy and other edibles, may be be spun off and continue as Interfoods Consolidated or be sold off. The business, which posted a first-quarter profit of $45,000, employs about 135 people.
Interfoods' wholly owned subsidiary, Holland American International Specialties, may also be spun off or sold as well.
Manlunas said the new company may be renamed. An announcement is expected next month.