Tyson Said to Make Offer to Buy Goldman Sachs’s Michael Foods

Feb 18, 2014 12:01 am ET

Feb. 18 (Bloomberg) -- Tyson Foods Inc. made a bid to buy Michael Foods Group Inc., the processing and distribution business controlled by Goldman Sachs Group’s private-equity arm, according to two people familiar with the matter.

It’s unclear how much competition Tyson will have for Michael. Some bids could come this week for the company, which may be worth about $2 billion, one of the people said. Offers were due at the end of last week and several private-equity firms were considering bids, said the two people, who asked not to be identified because the sale process is private.

Worth Sparkman, a spokesman for Springdale, Arkansas-based Tyson, declined to comment on the bid. Voicemail messages left for Michael Chief Financial Officer Mark Westphal and Diane Sparish, a spokeswoman, weren’t returned.

Tyson, the largest U.S. processor of beef and chicken, is trying to cushion against some of the volatility in commodity prices by expanding its prepared-foods business, which competes with Hormel Foods Corp. and Hillshire Brands Co. Tyson is targeting revenue growth of 6 percent to 8 percent for its value-added foods, and in the last year it has bought Bosco’s Pizza Co., Circle Foods LLC and Don Julio Foods Inc. Terms for all three deals weren’t disclosed.

Michael’s products include Simply Potatoes, Papetti’s Easy Eggs and Crystal Farms cheese. It has annual net sales of more than $1.5 billion, according to its website.

The Minnetonka, Minnesota-based company was acquired by Goldman from buyout firm Thomas H. Lee Partners LP for $1.7 billion in 2010, according to data compiled by Bloomberg. Michael was taken private in 2000 in a $562 million deal led by Goldner Hawn Johnson & Morrison Inc., the data show.

--Editors: Simon Casey, Robin Ganguly