Vestar Buys the Farm, Completes Sunrise –

Vestar Capital Partners and Goldner Hawn Johnson & Morrison last month agreed to recapitalize Michael Foods Inc., which sells eggs and dairy products to fast-food chains, for $800 million. Vestar Capital will invest $135 million in equity to own a majority share in Michael Foods, and Goldner Hawn will commit $30 million for a minority stake. Bank of America Corp. is providing a $470 million senior credit facility and underwriting $200 million in high yield bonds.

U.S. Bancorp Piper Jaffray Inc., Merrill Lynch & Co. and the law firm Kaplan Strangis Kaplan advised the seller in the transaction. As a result of the transaction, the company’s stockholders will collect $30.10 per share.

The deal is expected to be completed in early March or April of 2001.

“This is our fifth going private transaction in the last 18 months and this is another situation where we were able to find value in a public company that the market hasn’t assigned full value to,” said James Kelley, a partner at Vestar. “This is a company that really should be a private company.”

“As a private company, I believe we’ll be better able to manage the business in the interest of Michael Foods’ long-term interest,” said Chief Executive Officer Gregg Ostrander.

In addition to selling eggs and dairy products, Michael Foods also manufactures and distributes creamers, ice cream mix, refrigerated potatoes and grocery products. The company had revenue of an estimated $795 million last year.

“As a private company, we think there will be better opportunities to explore growth in the company – especially on the egg side of the business,” said Kelley. “We’re going to be focusing on product and geographic expansions.”

In other news, Vestar Capital and Park Avenue Equity Partners last month completed the buyout of Sunrise Medical, a maker of wheelchairs, hospital beds and health-care products for $225 million. Bankers Trust Co. provided $240 million in senior debt facility and $40 million in junior debt to finance the transaction.

The equity group will own approximately 80% of the company, with management retaining a 17% stake. Vestar and Park Avenue will control the company’s board of directors.

Sunrise Medical, will be merged with V.S.M. Acquisition Corp.. The group originally agreed to acquire Sunrise Medical last October.