May 11, 2016

By GAI News staff

Dean Foods Company announced it has agreed to acquire the manufacturing and retail units of Friendly’s Ice Cream for $155 million in cash.

The deal does not include Friendly’s restaurant chain with more than 260 U.S. locations. The restaurant business will continue to be held by an affiliate of Sun Capital Partners Inc. with the existing senior management team remaining in place.

“The restaurants have experienced tremendous growth in sales and guest traffic over the last 15 months; a direct result of the introduction of new and exciting menu items, extensive renovations to existing locations, compelling value propositions and the addition of drive-thru windows. Friendly’s restaurants are poised for continued market share growth,” Friendly’s president and CEO John Maguire told Nasdaq.

Founded in 1935 by Curtis and Prestley Blake, Friendly’s Ice Cream produces packaged ice cream and frozen desserts, distributing them through over 8,000 retail outlets focused on the U.S. northeast.  Over the past five years, Friendly’s has seen 105% growth in its retail business, and $166 million in net sales last year.

“Friendly’s Ice Cream’s growth momentum, strong brand presence in the Northeast U.S., and attractive financial profile, make it a compelling investment,” said Dean Foods in a company statement. “The acquisition of Friendly’s Ice Cream is expected to be immediately accretive to margins and earnings…”

Based in Dallas, Texas, Dean Foods has more than 50 national and regional dairy brands and private labels.  The group is a leading U.S. food and beverage company, making and distributing ice cream, juices, teas, bottled water, and cultured products, and is the largest processor and direct-to-store distributor of fresh fluid milk and dairy case products in the U.S.

This is not the first major deal in the ice cream sector this quarter. The news of this acquisition comes only weeks after Nestlé and UK-based R&R Ice Cream announced their agreement to form Froneri, a 50/50 joint venture. Froneri is expected to see sales of US$2.8 billion per year and be the third largest venture of its kind in the world.

The resulting entity will be headquartered in the UK and will be active in Europe, the Middle East (excluding Israel), Argentina, Australia, Brazil, the Philippines, and South Africa. Within these target markets, Froneri will unite Nestlé’s global brands with R&R’s manufacturing capacity and licensing agreements, combining both company’s ice cream businesses as well as Nestlé’s European frozen food business and its chilled dairy business in the Philippines, however, it will not include pizza and retail frozen food in Italy.