M&A

19 November, 2009

UPDATE 3-Blackstone in deal for Birds Eye as M&A thaws

* Frozen vegetable company had planned IPO

* Deal includes new investment of $300mln - source (Updates with confirmation from companies, new throughout)

By Megan Davies

NEW YORK, Nov 19 (Reuters) - Blackstone Group LP (BX.N) is to buy frozen foods maker Birds Eye Foods through its portfolio company Pinnacle Foods in a $1.3 billion deal, the companies said on Thursday.

It is the latest sign of a thawing in private equity dealflow, which was constrained by the financial turmoil.

Blackstone, which has immense real estate and private equity assets, has stepped up deal activity in the past few months, including buying Anheuser-Busch InBev's (ABI.BR) U.S. theme parks for up to $2.7 billion.

Blackstone is buying Birds Eye, which has long-term debt of about $700 million, through portfolio company Pinnacle, which makes packaged foods such as Hungry-Man frozen dinners, the companies announced in a press release. Blackstone bought Pinnacle in 2007 for $2.16 billion.

The private equity firm is investing $300 million of equity into Pinnacle to fund the transaction, a source familiar with the situation said.

It is a different track for Birds Eye, majority-owned by private equity firm Vestar Capital Partners, which had previously filed for an initial public offering to raise up to $350 million.

The Rochester, New York-based company said in the filing it held the top position in the frozen vegetables market with sales of $935.6 million in the fiscal year ended in June 2009. [ID:nN0984389].

Pinnacle Foods was advised by Blackstone, Barclays Capital, BofA Merrill Lynch (BAC.N), and Credit Suisse (CSGN.VX). Birds Eye was advised by Centerview Partners and JPMorgan (JPM.N). (Additional reporting by Ajay Kamalakaran in Bangalore) (Reporting by Megan Davies, editing by Dave Zimmerman)

Source: http://www.reuters.com