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.
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A Texas food company has scooped up the retail and manufacturing side of Friendly’s Ice Cream.
The Dallas-based company aims to purchase Friendly’s, which sells ice cream in about 8,000 grocery stores across New England, for $155 million in an all-cash deal that Dean Chief Executive Gregg Tanner said would fill a geographic gap in Dean’s ice cream business and add new manufacturing capabilities. The stock had fallen 9% in the three months before Tuesday’s results.
Friendly’s said their 260 restaurants will be owned by an affiliate of Sun Capital Partners, Inc. and Friendly’s current senior restaurant management team will continue to operate that business.
Shares of Dean Foods shot as high as $19 today but have since retreated to near $18, which happens to be Morgan Stanley’s price target for the stock.
Also this morning, kitchenware seller Lifetime Brands (LCUT) saw its adjusted Q1 net loss widen to $0.24 per share from a $0.14 per share loss during the same quarter a year ago and missing the Street view by $0.03 per share. Dean, which owns more than 50 regional brands (such as Land O’Lakes butter), reported first-quarter earnings that beat Wall Street forecasts. For the second quarter, adjusted EPS is expected to be 32 cents to 40 cents, surrounding the FactSet consensus of 34 cents. Earnings, adjusted for one-time gains and costs, came to 45 cents per share.
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Berkeley Farms dairy products, a brand of Dean Foods, are displayed for sale at a San Francisco supermarket. The company manufactures, markets, and distributes various branded and private label dairy case products, such as fluid milk, ice cream, cultured dairy products, creamers, ice cream mix, and other dairy products; and juices, teas, bottled water, and other products.
