KPS Capital to buy American & Efird from Ruddick

31 Oct '11

3 min read

Ruddick Corporation announced that it entered into a definitive agreement with two newly formed affiliates of KPS Capital Partners, LP (KPS) to sell all of its ownership interest in its wholly-owned subsidiary, American & Efird, Inc. (A&E) for $180 million in cash consideration, subject to adjustments as described below.

The Purchase Price is subject to adjustments for working capital and certain liabilities including under funded pension liability and foreign debt. The amount of the adjustment will be dependent on various factors including the timing of the closing of the transaction. Closing of the transaction is expected to occur in the Company's first quarter of fiscal 2012, which ends January 1, 2012, and is subject to closing conditions.

As a result of the transaction, the Company expects to record pre-tax non-cash impairment losses and other related expenses totaling between $42 and $48 million in the fourth quarter of fiscal 2011, which ended October 2, 2011. The after-tax impact to our fourth quarter results is expected to range between $33 million, or $0.68 per diluted share and $37 million, or $0.75 per diluted share.

Additional expenses, primarily related to the settlement of the pension liability and other employee benefit plans will be determined at closing and are expected to be recorded in the first quarter of fiscal 2012. The amount of these losses will include adjustments for the recognition of a pro-rata share of the pension plan's accumulated unrecognized net actuarial losses currently included in Accumulated Other Comprehensive Income and the impact from allocating existing plan assets under pension regulations.

These non-cash charges are currently estimated to be approximately $66 million before tax and $40 million after tax, or $0.81 per diluted share. Additionally, adjustments for changes in the plan's funded status from the Company's fiscal year end until closing will be made and cannot presently be estimated.

Thomas W. Dickson, Chairman of the Board, President and Chief Executive Officer of the Company commented that, "We are pleased to have reached an agreement with KPS regarding their acquisition of A&E. This transaction allows the management team and their associates at A&E to continue to pursue their strategic plan of transforming A&E into a more Asian-centric enterprise, which has been years in the making.

As A&E's business has grown substantially in Asia it has become less of a domestic company and more of a complex international manufacturing company and its strategic fit with Harris Teeter has become less evident to our shareholders.

This transaction enhances the strategic plan for Ruddick and Harris Teeter as the cash proceeds from the sale can be utilized for numerous purposes, including the acceleration of new store growth and the repayment of debt.

We are pleased that KPS has recognized the talent, experience and value of the A&E management team and their associates around the world and wish them much success in the coming years."

Wells Fargo Securities acted as exclusive financial advisor to the Company and McGuireWoods LLP served as legal counsel to the Company.

Aerican & Efird ("A&E") is one of the world's largest global manufacturers and distributors of industrial sewing thread, embroidery thread and technical textiles, produced from natural and synthetic fibers. Manufacturers of apparel, automotive materials, home furnishings, medical supplies and footwear rely on A&E industrial sewing thread to manufacture their products.

Ruddick Corporation

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