Largest U.S. food contract manufacturer Hearthside on the block


By Greg Roumeliotis

NEW YORK, Oct 25 (Reuters) - Private equity firm Wind PointPartners is exploring a sale of Hearthside Food Solutions LLC,the largest food contract manufacturer and largest privatelyheld bakery in the United States, three people familiar with thematter said this week.

Wind Point has asked Barclays Plc to run an auctionfor Hearthside, hoping it can fetch more than $1 billion, thepeople said, asking not to be identified as the sale process isconfidential.

Hearthside has earnings before interest, tax, depreciationand amortization of around $120 million, two of the peopleadded.

Wind Point and Hearthside did not respond to requests forcomment while Barclays declined to comment.

Hearthside produces baked foods and snacks out of 20manufacturing facilities in eight U.S. states for the world'spremier food companies, employing more than 7,500 full-timeworkers, according to its website.

The Downers Grove, Illinois-based company was created in2009 by Wind Point and former Ralcorp Frozen Bakery ProductsPresident and ConAgra Foods Inc veteran Rich Scalise,who now serves as Hearthside's chairman and chief executive.

Hearthside started with four manufacturing plants and justover 2,000 employees but grew quickly through acquisitions. LastMay it was merged with another Wind Point portfolio company thatspecializes in food packaging, Ryt-way Industries, to create afood contract manufacturer with over $1 billion in annual sales.

With outsourcing companies looking for greater economies ofscale and expanding their offerings to meet the increasingly complex formulation needs of their clients, the fragmented foodcontract manufacturing sector is expected to see more merger andacquisition activity, according to a third-quarter review of themarket by investment banking firm Capstone Partners LLC.

One of the major deals of the year in that market was the $5billion acquisition of Ralcorp by ConAgra in January, whichcreated the largest private brand packaged food business inNorth America.

In May, Hearthside agreed to sell Golden Temple, itsready-to-eat cereals and granola making business, to PostHoldings Inc, the company behind the Raisin Bran andHoney Bunches of Oats cereals, for $158 million in cash.

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