BLOOMINGTON, Minn. (AP) — Schwan's Co, a food distributor with deep roots in Minnesota known for its gold home-delivery trucks, has been sold to South Korea's largest food manufacturer.
Seoul-based CJ CheilJedang will pay $1.8 billion for an 80 percent stake in Schwan's and gain control of its businesses that serve restaurants, grocery stores and other retailers, the companies said in a statement Thursday. The deal is expected to close early next year.
The Schwan family will retain 20 percent ownership in the businesses being sold to CJCJ. The family will keep 100 percent ownership of Schwan's Home Service Inc., the home-delivery business that Marvin Schwan began in Marshall in 1952.
The companies said Schwan's will keep its name and its Minnesota offices in Bloomington and in Marshall. Schwan's CEO Dimitrios Smyrnios will continue to lead the company.
Paul Schwan, a Schwan's board member and son of Marvin Schwan, said it was important to find a partner who would honor the family's legacy.
"We are not expecting any change," Schwan said.
Smyrnios said other Schwan's executives also will stay.
"Obviously there's a certain amount of nervousness with a sale," Smyrnios told the Minneapolis Star Tribune on Wednesday night. "We are going to operate business as usual in Marshall, business as usual in Bloomington, business as usual in Minnesota."
Schwan's has about $3 billion in annual sales and employs about 12,000. The company offers frozen and ready-made products, including Red Baron, Freschetta and Tony's pizzas, Mrs. Smith's pies, Edwards desserts and Pagoda Asian-style snacks. Schwan's also has a food service business that sells to schools, hospitals and other institutions.
Smyrnios said Schwan's wants to grow. "This is not a cost-cutting exercise," he said.
CJCJ is the largest unit of the CJ Group, a conglomerate of food and related companies that was originally part of the Samsung Group. CJCJ had $14.5 billion in sales last year and is the largest food producer in South Korea. The company also sells rice, noodles and Korean sauces and spices in U.S. stores under the CJ, Annie Chun, Bibigo and Omni labels. The company also runs the Bibigo chain of Asian fast-food restaurants in California.
CJCJ said it expects to gain scale and cost efficiencies in U.S. stores with the Schwan's acquisition. Company officials also hope Schwan's distribution system will bring their Korean products into more U.S. groceries and restaurants.
"CJ will accelerate the globalization of Korean food culture," CJCJ chief executive Shin Ho-kang said in a statement.
When the deal closes, Schwan's will become a unit of CJ Foods America Corp., the U.S. subsidiary of CJCJ. CJCJ currently has five U.S. manufacturing and distribution sites and will pick up 17 food manufacturing facilities and 10 distribution centers across the United States with Schwan's.