Dean Foods to Buy Friendly's Ice Cream

Food and beverage business Dean Foods Company has agreed to acquire the manufacturing and retail ice cream business Friendly's Ice Cream for $155 million in cash.from an affiliate of Friendly's Ice Cream, LLC.

Friendly's Ice Cream, with $166 million in net sales in 2015, produces packaged ice cream and other frozen dessert products, including single-serve sundae cups, novelty items, cakes and rolls. Friendly's distributes these products in over 8,000 retail outlets. Founded in 1935, the brand has a long history.

Coupled with the momentum of Dean Foods' current regional brands, Mayfield and Dean's, the Friendly's brand will be a catalyst in Dean Foods' strategy to grow its existing ice cream business and branded portfolio. Friendly's ice cream strongly resonates with consumers throughout the Northeast.

Friendly's Ice Cream's growth momentum, strong brand presence in the Northeast U.S., and attractive financial profile, make it a compelling investment. The acquisition of Friendly's Ice Cream is expected to be immediately accretive to margins and earnings, and Dean Foods expects that the acquisition will add approximately $0.06 earnings per share accretion in 2016. At closing, Dean Foods intends to fund the transaction with cash on hand and our existing revolving facilities.

In addition to acquiring Friendly's manufacturing and retail ice cream business, Dean Foods will acquire the Friendly's trademark as well as all intellectual property associated with the ice cream business. Friendly's Restaurants, a family-dining restaurant chain with over 260 locations in the U.S., will continue to be owned and operated by an affiliate of Sun Capital Partners, Inc. and will license use of the Friendly's trademark under a license agreement entered into as part of the transaction.

The transaction is expected to close late in the second quarter of 2016, subject to regulatory approvals and other customary closing conditions. Following the close of the transaction, Friendly's Ice Cream will continue to operate out of its facility in Wilbraham, Massachusetts, and the senior management team of Friendly's Ice Cream will continue to lead the business. Dean Foods will welcome the Friendly's employees into its company.

Rothschild Inc. acted as financial advisor to Dean Foods on the transaction, and Gibson Dunn provided legal support. Lazard Middle Marketserved as financial advisor to Friendly's Ice Cream on the transaction, and Morgan, Lewis & Bockius was the company's legal advisor.