Blackstone Group agreed to buy Pinnacle Foods Group Inc. on Monday for $2.2 billion including debt, becoming the third private equity firm in four years to own the maker of Duncan Hines cake mixes and Hungry Man frozen dinners.
Blackstone, based in New York, is acquiring Pinnacle of Cherry Hill, N.J., from CCMP Capital Advisors, the companies said. Blackstone didn't say how much debt was involved.
Pinnacle, which has annual gross sales of about $2.1 billion, received competing offers, including one from an undisclosed hedge fund company, Chairman C. Dean Metropoulos said. CCMP, formerly JPMorgan Partners, will recoup about 2 1/2 times its original cash investment, he said.
Blackstone recently raised a $15.6-billion fund, the world's biggest.
Pinnacle, which has more than 3,000 employees, also makes Aunt Jemima breakfast foods, Mrs. Butterworth's syrups, Vlasic pickles, Armour canned meat and Lender's bagels. Sales of the supermarket foods rose in recent years.
Metropoulos will be succeeded as chairman by former Kraft Foods Inc. Chief Executive Roger Deromedi when the deal is completed by June 30. Deromedi, 53, was ousted in June from Kraft, the world's second-largest food maker by sales, behind Nestle.
Hicks, Muse, Tate & Furst Inc. created Pinnacle in 2001, when it acquired the North American brands of Vlasic Foods International Inc. in a U.S. Bankruptcy Court sale for $370 million.
Hicks Muse was founded by John Muse and Thomas Hicks in 1989 and is now called HM Capital Partners.
CCMP bought Pinnacle from Hicks Muse in August 2003 in a deal worth $485 million and in May started preparations for an initial public stock offering.
"Several people came to us and said, can we convince you not to go public and sell us the business?" Metropoulos said.
"We got a very fair value, and we're leaving a fair amount. It's a great platform for acquisitions in the next couple of years."
Pinnacle's other shareholders include JW Childs Associates and a group of bondholders of Aurora Foods Inc., which merged with Pinnacle in 2005 to exit bankruptcy protection.
Buyout firms use a combination of their own funds and debt to pay for takeovers and then seek to improve profit by boosting sales, selling assets and cutting costs. The firms typically sell the companies within five years.
Lehman Bros. Holdings Inc. advised Pinnacle. Centerview Partners advised Blackstone.