Tuesday, July 3, 2007
One of the great things about being an M&A lawyer is the diversity of companies you interact with and have the opportunity to learn about. And you are often surprised at some of the niches and their value. In this regard, I still remember when I participated in the auction for Golden State Foods Corporation in 1998. Golden State was the largest liquid food processor for McDonalds (its only customer) at the time, and eventually sold for over $400 million to an investment consortium headed by Ron Burkle's The Yucaipa Cos. I still remember due diligence at the company's plant in City of Industry California where we saw and smelled the gigantic vats of ketchup and other sauce and, yes, McDonald's was served for lunch. And being surprised how a company supplying liquid sauce and other sundries to a single customer could be worth so much.
So, it was with similar feelings that I saw yesterday that New York Stock Exchange-listed Reddy Ice Holdings, the largest maker of packaged ice in the United States, announced it will be acquired by GSO Capital Partners for $681.5 million in a deal valued at $1.1 billion including debt. Reddy Ice stockholders will receive $31.25 per share in cash for each common share of the company's stock they hold. Debt financing for the transaction has been committed by Morgan Stanley. For interested buyers and according to the merger agreement, the deal has a 45-day go-shop and a $7 million dollar break fee during the go-shop period,rising to $21 million thereafter. And for such potential bidders or simply product buyers for tomorrow's July 4th holiday, note Reddy's apropos slogan: "Good Times are in The Bag".