Blackstone Group (NYSE: BX), along with Wellspring Capital Management, has agreed to purchase Performance Food Group (NASDAQ: PFGC) for roughly $1.3 billion (which includes $100 million in debt on the company's balance sheet). The deal is certainly in line of the latest trend for private equity: focusing on smaller deals because of the credit crunch.
Founded in 1925, Performance Food is a food distributor of brands like AFFLAB, Bay Winds, Brilliance, Empire's Treasure, First Mark, Guest House, Heritage Ovens, PFG Custom Meats, Pocahontas, Raffinato, Ridgecrest Culinary, Silver Source, Village Garden, and West Creek. The customer base includes schools, hotels, restaurants, and cafeterias.
In fiscal Q3, Performance Food's earnings increased 33% to $16 million, or $0.46 per share. However, with the weakening economy -- which is impacting restaurants -- there could be some challenges for Performance Food.
Interestingly enough, Blackstone and Wellspring already own Vistar, which is a major food distributor. So the Performance Food deal should offer some synergies.
In today's trading, Performance Food's stock is up 33% to $32.18.
Tom Taulli is the author of various books, including The Complete M&A Handbook
