A Yorba Linda private equity firm has bought a Midwestern meat processor for $127 million.
Fairmont Capital Inc. said it bought Bridgeview, Ill.-based Stampede Meat Inc., a maker of pre-packaged beef and pork cuts with $200 million in annual sales and about 750 workers.
Family-owned Stampede was founded by Joseph Ligas, who worked for years in the Chicago stockyards. He started the business in 1995 and runs it with his children.
The deal allowed Ligas to cash out some of his stake and keep sons Edward J. Ligas and Joe Ligas Jr. on as president and vice president of operations.
“The (brothers) rolled over most of their money into the continuing transaction,” Fairmont President Michael Gibbons said.
Stampede processes meat entrees that are seasoned and portioned, including prime rib, pot roast, pork chops and corned and roast beef.
The meat is frozen and sent to customers, which include airlines, casinos, theme parks, cruise ships, grocery stores, wholesale retailers such as Costco, schools and the military.
Stampede has a 140,000-square-foot plant in Bridgeview, which opened in 2002, and a 35,000-square-foot site in nearby Oak Lawn where meat is fully cooked and then shipped out.
Fairmont contributed a little less than half of the $127 million. The rest was financed by the Ligas sons and a debt offering by Fairmont’s partners, Sankaty Advisors LLC of Boston and Pittsburgh’s PNC Mezzanine Capital.
Fairmont seeks out deals of $5 million to $300 million. The company invests in midsize consumer businesses with more than $10 million in yearly sales. It typically targets family businesses whose company head has stopped overseeing day-to-day operations. Fairmont also looks for struggling public companies looking to “go private.”
The company typically holds its investments for three to five years, Gibbons said.
Restaurant Deals
Past investments include family-style restaurant chains, furniture stores and an auction house for stolen or wrecked cars.
Fairmont’s bought out San Diego-based Garden Fresh Restaurant Corp., which owns the Souplantation salad bar-style restaurants, and Vicorp Restaurants Inc., a Denver based chain that operates Baker’s Square and Village Inn restaurants. It since has sold both companies.
At one time, Fairmont also owned Brea-based Krause’s Furniture Inc., owner of Krause’s Sofa Factory. The company snatched up Krause from its aging founder after the company filed for bankruptcy in 2001.
Up until now, Fairmont’s most recent buy was in December 2005, when it acquired Shari’s Management Corp. Beaverton, Ore.-based Shari’s operates the Shari’s Restaurant chain in the Pacific Northwest. Fairmont since has sold that company.
The private investment firm learned about the processed foods industry through its restaurant buys.
“As we owned restaurant chains, we began to see an evolution with some of the food providers,” Gibbons said. “We began to look at opportunities in value-added food processing.”
Such foods save restaurants preparation time and labor costs, Gibbons said. Pre-packaged meat helps restaurants be consistent in presentation and taste, too, he said.
Fairmont plans to buy anywhere from eight to 10 businesses during the next few years, Gibbons said. He’s eyeing a few more food processors, but declined to give specifics.
