Turnaround specialist Questor Management Co. will pay between $120 million and $140 million to buy Chef Solutions, a supplier of prepared foods to supermarkets and restaurant chains, according to sources familiar with the deal.
The purchase, announced Thursday, is from German airline Deutsche Lufthansa AG.
In order to close the deal quickly, the Southfield, Mich.-based firm plans to finance it with equity and a bridge loan from an $860 million buyout fund it closed in 1999. Questor hopes to replace the bridge loan with bank financing in the coming months.
"We wanted to move with alacrity to make sure this one did not get away," said Michael D. Madden, the Questor principal who led the deal.
Last year, Chef Solutions lost money on sales of about $530 million. The company became less of a focus for Deutsche Lufthansa after airline traffic slowed in the wake of the Sept. 11 terrorist attacks, said Madden.
Chef Solutions is the leading prepared-foods distributor in the United States _ a position Questor hopes to build upon through acquisitions. Questor also plans to grow the business through new products, such as a recently introduced low-carb bread, Madden said.
"Supermarkets are using our product innovations as a means to draw in customers" as they compete with Wal-Mart Stores Inc., he said.
The company operates in three areas of the food-supply business. About 35 percent of sales come from the sale of fruit salad, potato salad, cole slaw and other prepared foods to supermarket deli departments, casual-dining restaurant chains and to school cafeterias.
Another roughly 35 percent of sales comes from a bakery division, which sells rolls and bagels to supermarkets and restaurants. The rest of the sales comes from a food-distribution business, which operates mostly in the Midwest.