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 Michael Foods has asked Goldman Sachs' investment banking unit and
Bank of America Merrill Lynch <BAC.N> to help it prepare for an
auction, and is working on detailed financial information to send to
potential buyers, the people said.
The company could attract interest from food companies as well as
private equity firms, said the people, who asked not to be named
because the matter is not public.
Michael Foods and Goldman Sachs did not immediately respond to
requests for comment, while Bank of America Merrill Lynch declined
to comment.
Minnetonka, Minnesota-based Michael Foods produces and distributes
various products to the retail, food service and ingredient markets,
including specialty egg products, refrigerated potato products,
cheese and other dairy products.
Its egg product brands include Papetti's, Abbotsford Farms, All
Whites and Better'n Eggs. Michael Foods also owns the Simply
Potatoes line of refrigerated potato products, as well as Crystal
Farms branded cheese and refrigerated products, according to its
website.
Goldman Sachs Capital Partners bought Michael Foods from private
equity firm Thomas H. Lee Partners LP in 2010 for around $1.7
billion. Thomas H. Lee retained an ownership stake of about 20
percent as part of the transaction.
In the nine months ending September 28, Michael Foods posted
adjusted earnings before interest, tax, depreciation and
amortization (EBITDA) of $188 million, up 7.2 percent from the same
period last year.
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For the full year, the company is on track to report EBITDA of close
to $250 million. Michael Foods is hoping to fetch roughly 9 times
that amount, two of the people said.
Goldman Sachs has changed the way it invests in private equity since
it bought Michael Foods to comply with the so-called Volcker rule,
which limits investment bank investments in illiquid asset classes.
In a bid to pool money for deals without raising a private equity
fund, the Wall Street bank has been underwriting the equity in deals
and then lining up clients willing to put money into accounts set up
to invest in them, people familiar with the matter said earlier this
year.
(Reporting by Soyoung Kim, Greg
Roumeliotis and Olivia Oran in New York. editing by Andre Grenon)
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