CHICAGO — Grand Metropolitan PLC, Pillsbury's new owner, sliced off another section of the food and restaurant group Wednesday, agreeing to sell the S&A Restaurant Corp. to an investor group including top managers for $431 million.
S&A was part of Pillsbury Co., acquired by Grand Met in January. Grand Met has launched a program of cost cuts and asset sales as it attempts to make Pillsbury more profitable.
Grand Met said in a statement that the investor group was led by DSJ/Inverness & Co. and the senior management of S&A. Financing will be provided by Citicorp's Citicorp Venture Capital Ltd. and others.
In its first move to slim down Pillsbury, Grand Met cut the company's Minneapolis headquarters staff by nearly a quarter with 550 layoffs earlier this week. London-based Grand Met bought Pillsbury, one of the best-known U.S. food and restaurant companies, for about $5.7 billion after a bitter struggle that included repeated legal clashes.
S&A, with Steak & Ale and Bennigan's family restaurant chains, has a total of 380 outlets. It had sales of $716 million in the fiscal year ended May 31, 1988, and operating income of $50 million.
Grand Met had previously stated that it would sell the S&A restaurant business to comply with laws in most states that prohibit a distiller from owning retail liquor outlets or restaurants that serve alcoholic beverages.
"We will invest the proceeds (from the sale) in the growth of Pillsbury Foods and Burger King to enhance shareholders' investment in Grand Met's most recently acquired U.S. operation," said Ian Martin, chief executive of Grand Met's food operations.
Lawrence Adelman, food industry analyst at Dean Witter Reynolds, said the two chains had to be sold together because Bennigan's has been profitable while Steak & Ale has had less successful because Americans are consuming less beef and many outlets are in Texas where the economy is weak.