Logo for Birds Eye.

Vestar's Birds Eye Named Deal of the Year by Buyouts Magazine

Buyouts Magazine's "Large Market Deal of the Year"

New York - April 14, 2010 - From Buyouts Yearbook 2010 - Who said sponsor-to-sponsor deals are dead? Vestar Capital Partners earned a welcome Christmas present Dec. 23 when it sold Birds Eye Foods, a maker and marketer of processed foods, to Pinnacle Foods Group LLC, a portfolio company of The Blackstone Group, for $1.3 billion.

The deal generated 4.4x the New York-based buyout shop's invested capital and an internal rate of return of more than 30 percent. The exit came after a seven-year holding period that demonstrated Vestar Capital's ability to execute complicated deals and re-position lagging brands. Under Vestar Capital's guidance the company slashed under-performing businesses, sold factories and other assets the company didn't need, and then invested heavily in marketing and research and development to guide Birds Eye into new businesses.

Vestar Capital bought Birds Eye in August 2002 for $175 million cash from Pro-Fac Cooperative Inc., a grower's cooperative, in a deal with a total enterprise value of $735 million, or 5.9x the company's EBITDA over the previous 12 months. Equity for the deal came out of the firm's fourth fund, a $2.5 billion pool of capital.

Executing the deal required some assurances from Vestar Capital that Pro-Fac, which became a minority investor, would still have a place to sell its vegetables. The firm agreed to a 10-year supply agreement, which gave ProFac the stability it needed to go forward. "That was very important in getting the deal done," Brian Ratzan, a Vestar Capital managing director in charge of the firm's consumer group, told Buyouts.

Proceeds from the investment paid down more than $140 million of debt, reducing leverage to 4.5x EBITDA from more than 6x.

At the time of the investment, Birds Eye employed 4,000 people in 26 production facilities. The company's brand was fading and it was losing market share, with Birds Eye comprising 17 percent of the U.S. frozen vegetable category.

Vestar Capital's investment spanned two stages, with the firm spending most of the first few years right-sizing the business and refocusing on Birds Eye's core brand. Birds Eye sold plants in Massachusetts and Mexico, as well as lower-margin, under-performing businesses,. including a Shortsville, N.Y.-based sauerkraut business.

The firm also sold its Rochester, N.Y.-based canned vegetable businesses and, most importantly, its private-label frozen vegetable business, to the Allen Canning Company, a large packaged foods and meats company. The private-label market for frozen vegetables was too crowded, Ratzan said, with 15 to 20 producers, which led to unattractive competitive dynamics: low profit margins and low return on invested capital. The company had $100 million of working capital tied up in the private label business, which only generated $1 million to $2 million of EBITDA, Ratzan said. After selling its private-label business, in 2006, Birds Eye reduced its stock-keeping units to 480 from 4,500.

In 2005, the firm hired Neil Harrison, the former CEO of Heinz North America, to lead investments in marketing and advertising and new product development. This marked the second phase of Vestar Capital's investment, when it sought to expand the company. Under Harrison, the company's consumer marketing spending increased to $53.9 million in 2009, up from $31.1 million in 2005, or approximately 15 percent per year.

In January 2006, the company launched its "Steamfresh" technology, which allowed consumers to steam Birds Eye vegetables and meals in microwave ovens with a specially designed bag. The innovation was a boon to the company's steamed vegetable category, which grew to generate $580 million for its retail grocery channel. The firm also launched a total of 23 new frozen vegetable products and 16 new complete bagged meals products, and by the end of 2009, these new products generated 15.4 percent of net sales for the frozen food group.

Vestar Capital professionals helped transform the company from a commodity vegetable producer to a leader in branded foods and meals, including Birds Eye Steamfresh, Birds Eye Voila!, and Nalley and Brooks chili and chili ingredients. Birds Eye generated more than 10 percent annual growth in total revenue, to $936 million in 2009, up from $636 million in 2005; and more than 14 percent annual growth in EBITDA, to $150 million in 2009, up from $88 million in 2005. The company increased its market share in its core U.S. frozen vegetables category by 50 percent, making it the market leader with 26.5 percent in 2009, up from 17 percent in 2002. The company has captured second place in market share in complete bagged meals.

Two years before it would sell Birds Eye, Vestar Capital took advantage of the healthy credit markets to execute two dividend recapitalizations in March and July of 2007, which generated 2.5x the firm's invested capital; the financings had issuer-friendly terms, which did not inhibit the company's ability to invest in its growth.

Vestar Capital initially planned to take Birds Eye public, and registered for a $350 million initial public offering in October 2009. "There's not a lot of supply of food company IPOs that offer stability and growth, particularly in this economic environment, and it was an attractive IPO," Ratzan said.

But, after the company filed, interested buyers started calling the firm with offers that would generate far more money than executives at Vestar Capital hoped to with the IPO.

At the time of the sale to Pinnacle Foods Group, Birds Eye's trailing 12-month revenue was $921 million and EBITDA was $145 million. The company was now slimmer, with 1,700 employees and 7 production facilities, and positioned for growth with a dominating market position in frozen vegetables from which it could trumpet its new products. -BV


Firm: Vestar Capital Partners

Target: Birds Eye Foods

Price: $1.3 billion

Return Multiple: 4.4x, 30 percent IRR

Hold Period: 7.4 years

Buyer: Pinnacle Foods Group LLC, Blackstone Group


  • Abandoned lagging businesses to reposition company for growth.
  • Hired CEO with major brand experience.
  • Invested heavily in marketing and new product development.
  • Introduced several new products.
  • Gained number one market share position in packaged frozen foods.
  • Returned 4.4x invested capital, achieved 30 percent IRR.

Logo for Sunrise Medical.

Vestar's Sunrise Medical Completes Refinancing

Achieves Record Annual Profit Growth

April 5, 2010 (Malsch, Germany and Longmont, Co.) — Sunrise Medical, Inc. (“Sunrise” or “Company”) announced today that it has successfully refinanced its existing Senior Secured Credit Facilities with the issuance of a new long-term €90 million Senior Secured Term Loan. In connection with the refinancing, the Company simultaneously announced the official separation of DeVilbiss Healthcare (“DeVilbiss”), Sunrise’s respiratory and sleep therapy division, into an independent company, effective April 2nd.

The refinancing follows the strongest growth year in the Company’s history, with annual growth in earnings before interest, taxes, depreciation and amortization exceeding 100%. Additionally, the Company has recently launched four new products including the highly regarded Q7 custom wheelchair line.

“This financing is an important and exciting step for Sunrise as we continue to execute our strategic growth plans.” Thomas Rossnagel, President and CEO of Sunrise Medical commented. “The refinancing of our senior secured facilities leaves us in a strong financial position to fund growth. This reorganization also allows Sunrise to pursue acquisitions in both Europe and North America. Our Premium Products and Services strategy will help in driving further growth in our business and delivering the highest quality products to our customers around the world.”

The refinancing allows Sunrise’s European business to become the sole borrower, leaving North America debt-free and fully funded for growth.

In conjunction with the refinancing, DeVilbiss Healthcare will operate as a separate, independent company, focused on its respiratory and sleep businesses. While DeVilbiss has been operating as a separate division since 2007, the refinancing will allow the company to officially standalone as its own entity with no debt and separate long-term financing.

Existing investors including Vestar Capital Partners and Park Avenue Equity Partners maintain controlling investment interests in both organizations, and will serve on the boards of directors of both companies. Management will also have an ownership stake in the companies.

About Sunrise Medical, Inc.

Sunrise is a world leader in the development, design, manufacture & distribution of manual wheelchairs, power wheelchairs, motorized scooters and both standard and customized seating & positioning systems. Sunrise manufactures products in its own facilities in the United States, Mexico, Germany, United Kingdom, Spain and China. Our key products, marketed under the Quickie, Sopur, Zippie, Breezy, Sterling and Jay proprietary brands, are sold through a network of homecare medical product dealers or distributors in over 130 countries. The Company is headquartered in Malsch, Germany with North American headquarters in Longmont, Colorado and employs 1,800 associates worldwide.

For more information about the company, please visit www.sunrisemedical.com.

About DeVilbiss Healthcare

DeVilbiss Healthcare is a world leader in the design, manufacture, and marketing of respiratory medical products that address the respiratory needs of patients in institutional and homecare settings. Primary product lines include oxygen therapy equipment, pulmonary drug delivery, and sleep apnea therapy. DeVilbiss products are manufactured in the United States, Europe and Asia and are distributed in more than 100 countries around the world. The Company is headquartered in Somerset, PA.

For more information about the company, please visit www.devilbisshealthcare.com.


Sunrise Medical:
Pete Whittle
[email protected]

DeVilbiss Healthcare:
Michael Panian
[email protected]

Owen Blicksilver Public Relations:
Kristin Celauro
[email protected]