One Of MN’s Largest Private Companies Receives Buyout Bid

One Of MN’s Largest Private Companies Receives Buyout Bid

Tyson Foods, a competitor of Minnesota's Hormel, has reportedly made a bid to acquire Minnetonka-based Michael Foods.

One of Minnesota’s largest private companies is reportedly on the auction block, and it appears at least one interested suitor has emerged.

Minnetonka-based Michael Foods, Inc., has reportedly received an official bid, and possibly more than one. Tuesday morning calls to the company were not immediately returned, but Bloomberg reported on the development.

On Tuesday, Bloomberg reported that Springdale, Arkansas-based Tyson Foods, Inc., has made an official offer for Michael Foods.

Citing two unnamed sources, Bloomberg said that bids for Michael Foods were due at the end of last week, and several private-equity firms were considering making an offer—meaning Tyson might face competition.

Reuters had reported in January that food production giant Tyson was mulling a bid for Michael Foods. Citing “three people familiar with the matter,” Reuters said at the time that a potential bid could come in the range of $2 billion to $2.5 billion.

A company spokesperson contacted by Bloomberg this week reportedly declined to comment on the bid.

Michael Foods last changed hands in 2010. At that time, Thomas H. Lee Partners, a Boston-based private equity firm, sold Michael Foods to GS Capital Partners, an arm of financial giant Goldman Sachs, for $1.7 million. Thomas H. Lee Partners said at the time that it planned to maintain a minority stake in Michael Foods.

It’s unclear how much competition Tyson may face in its recent bid, and additional offers for Michael Foods may come this week, the unnamed sources told Bloomberg.

One of Minnesota’s Largest Private Companies

Michael Foods provides processed egg products, refrigerated potato products, and specialty dairy products. Its brands include Papetti’s, Crystal Farms, AllWhites, and Simply Potatoes, among others.

It ranked as Minnesota’s 11th-largest private company in Twin Cities Business’ “Black Book.” In 2012, its revenue totaled $1.86 billion, and the company employs roughly 3,500.

For the quarter that ended September 28 (the latest for which information is available), Michael Foods reported $486.9 million in net revenue, up from $470.9 million during the same period the previous year. Net earnings, meanwhile, totaled $10.6 million, up from $8.7 million.

Tyson, meanwhile, bills itself as one of the world’s largest processors and marketers of chicken, beef, and pork—and the Michael Foods deal would expand the company’s presence in the prepared-foods category. Tyson employs 115,000 people at more than 400 facilities, according to its website. Its stock is publicly traded on the New York Stock Exchange, and the company’s revenue exceeded $34 billion in its most recently completed fiscal year.

Tyson is a major competitor of local food-processing giant Hormel Foods Corporation, which is based in Austin. Tyson has made a number of acquisitions in recent years, including Bosco’s Pizza, Circle Foods, and Don Julio Foods.

Michael Foods is headquartered in Minnetonka but has operations in multiple states. Last fall, the company shuttered an egg processing facility in southeastern Minnesota, a move that reportedly involved laying off roughly 40 employees.

Then, the company said in December that it had begun construction of a $33 million expansion of a Nebraska plant, although that move was not expected to bring additional jobs to the facility.