MINNEAPOLIS (AP) -- Frozen foods supplier Overhill Farms has agreed to be purchased for approximately $80 million by Bellisio Foods, allowing the company to expand its position in the frozen entree and snack markets.
Overhill announced in August that it was considering strategic options. Often this includes a potential sale of a company.
Bellisio, based in Minneapolis, is the third-biggest producer of frozen entrees in the U.S. Its brands include Michelina's frozen entrees. The company has worked with Overhill over the past two years to make and distribute frozen meals under the Boston Market brand. Overhill's customers include Jenny Craig Inc., Target Corp., American Airlines Inc. and others.
Bellisio Chairman and CEO Joel Conner said in a statement on Wednesday that tapping into Overhill's brand portfolio and its West Coast manufacturing facilities will help to better serve existing and new customers.
Bellisio Foods Inc. will pay $5 per share, which is a 15 percent premium to Overhill's Tuesday closing price of $4.36. The companies put the value of the deal at about $80.9 million.
Overhill Farms Inc. has approximately 16 million outstanding shares, according to FactSet.
Shares of Overhill gained 59 cents, or 13.5 percent, to $4.95 in morning trading. Earlier in the session the stock touched the buyout offer of $5, its highest level in more than a year.
Both companies' boards unanimously approved the transaction.
The acquisition is expected to close during the fiscal fourth quarter. It still needs approval from Overhill's stockholders and is not subject to a financing condition.