Standard acquired by Fresh Del Monte
January 9, 2004
Dallas company sold in $100 million cash deal
Downtown Dallas - Standard Fruit and Vegetable Co. set out last fall to make acquisitions as a way to aggressively evolve in its rapidly changing industry.
But instead, the Dallas-based fruit and vegetable distributor ended up being acquired.
In a $100 million cash deal that closed Jan. 27, the 70-year-old distributor was purchased by Fresh Del Monte Produce Inc. (NYSE: FDP), with its executive offices in Coral Gables, Fla. One of the largest producers and distributors of fresh pineapple and bananas, Del Monte is licensed to sell produce under the trademarked Del Monte label.
Standard was previously owned by Jay Pack, CEO and president of the company. Standard, a high-profile name in the industry, was founded by Abe Rutchik, the grandfather of Pack's wife, Ruthie.
"We had thought the private equity route was the way to go, and we really hadn't thought of selling the company entirely," Pack said. "But Del Monte's investment banker contacted us and we put them in touch with our investment banker. In the end we felt it was a great strategic fit for our organization."
Besides the purchase price, the sellers were paid excess working capital in an amount Pack declined to disclose. In addition, some nonoperating assets, such as a company plane, were also transferred to the former owners.
Standard, which employs more than 1,000 throughout the United States, had revenue of $350 million in 2002. About 65% of its business is with national and regional retailers, such as grocery store chains, while 35% is with food service distributors who supply restaurants, hospitals, schools and others.
The company offered 2,300 items from throughout the United States, as well as internationally, with a mix of half fruits and half vegetables.
Very well known in its industry, Standard was the largest repacker of tomatoes and one of the largest repackers of potatoes, sorting product for its customers to standardize them for color, size or both.
Standard throughout the 1960s and 1970s had been growing as a wholesaler, expanding on a limited regional basis. Marty Rutchik, Pack's father-in-law who operated the business, and a brother, Morris, sold the company to the British Pollypeck Group in 1990. That buyer later divested its United States assets and Rutchik and Pack bought the company back in 1992, at which time they embarked on a new strategy to become a value-added player by expanding the repackaging business. Rutchik died of cancer in 1998.
"He was a father-in-law, a best friend and a great partner," Pack said. "We just had a great relationship."
By picking up Standard, Del Monte gains six distribution centers totaling 700,000 square feet, the largest of which, at some 300,000 square feet, is in Dallas. Besides Dallas, centers are located in Kansas City, Mo., Atlanta, Phoenix and Monte Vista, Colo.
While the Standard name will be no more, Pack said operations in Dallas and the other locations will continue as they have been. Pack's title and job will change to that of vice president of business development focusing on domestic acquisitions and maintaining key customer relations for Fresh Del Monte.
Acquiring Standard gives Fresh Del Monte several advantages, according to a statement from the company.
The acquisition "enhances Fresh Del Monte's diversification strategy by expanding its product mix, advancing its vertical integration and increasing its U.S. presence in key markets, particularly the Southwest," the statement said. "Fresh Del Monte expects to realize substantial cost savings from Standard's acquisition as it integrates distribution, sales, marketing, transportation and purchasing with Fresh Del Monte's infrastructure."
Fresh Del Monte is held 45% by Mohammad Abu-Ghazaleh, chairman and CEO, and other members of his family. Abu-Ghazaleh said in the statement the acquisition of Standard offers many opportunities to grow revenue and market share while increasing earnings.
Fresh Del Monte, which is based in the Cayman Islands, was acquired in 1996 by the Chilean IAT Group, which is controlled by members of the Abu-Ghazaleh family. Fresh Del Monte had sales of $2.1 billion in 2002.
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{Lidji Dorey & Hooper represented Standard Fruit & Vegetable in this transaction.}
