Siloam Springs-based Allens Foods could soon be gobbled up by Seneca Foods Corporation as the New York-based fruit and vegetable manufacturer entered into an asset purchase agreement for $148 million on Tuesday (Dec. 17).
The deal would give Seneca essentially all of the operating assets of Allens Foods, subject to a working capital adjustment, plus the assumption of certain liabilities, according to the release. The transaction would take place through a court-supervised process under Section 363 of the U.S. Bankruptcy Code and is subject to an auction and bankruptcy court approval.
On Oct. 28, Allens filed a petition for relief under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Western District of Arkansas. The purchase agreement will serve as the "stalking-horse bid" in the auction process.
Allens will seek bankruptcy court approval of Seneca's asset purchase agreement as the stalking horse bid and certain bid procedures at a hearing in the near future. The preliminary hearing for the bankruptcy scheduled for Dec. 16 was postponed until Jan. 17.
If Seneca is successful in its acquisition of these assets, they will fit with its long-term growth objective to expand the line of canned vegetable offerings to include sweet potatoes, southern vegetables, and broaden its offerings of dry beans and spinach.
Miller Buckfire & Co., LLC, a Stifel Company, is serving as the Seneca’s investment banker. Jaeckle Fleischmann & Mugel, LLP and Wright, Lindsey & Jennings LLP are serving as legal advisors.
This is not the first time these two food processors have tried to join hands. In July 2011 Seneca and Allens signed a memorandum of understanding in hopes of a merger of the two companies in an all stock transaction.
But after several months of due diligence by both parties the deal was terminated in September 2011. Seneca said it had hoped at that time that Allens would become a subsidiary of Seneca Foods, but no terms were ever disclosed.
Seneca Foods is the nation's largest processor of canned fruits and vegetables. The company reported weaker net earnings for the fiscal six months ended Sept. 28 of $8 million, this compared to $22.7 million for the same period in the prior year. However, net sales increased $20.1 million, or 3.7% to $568.8 million in the first six months of fiscal 2013.
In March 2012, Allens sold off four of its six frozen vegetable operations to the French company, Bonduelle Group.
Both companies called the deal a “win-win,” but no terms were released.
Then CEO Rick Allen, said at the time the move was consistent with a renewed focus on Allens core business. He expected then to expand in the areas it was most passionate about, canned Southern style vegetables.
Allens entered the frozen vegetable segment by acquiring the Birds Eye brand products in 2006.