Performance Food to be acquired by Blackstone, Wellspring affiliate

By Jennifer Chiou

New York, Jan. 18 - Performance Food Group Co. said it signed a definitive merger agreement to be acquired by an affiliate of the Blackstone Group and Wellspring Capital Management in a transaction valued at $1.3 billion.

Under the agreement, Performance Food shareholders will receive $34.50 in cash for each share, representing a premium of 33.4% over the average closing share price for the 30 trading days ended Jan. 17 and 42.6% over Thursday's closing share price of $24.19.

The Richmond, Va., restaurant food distributor said that its board unanimously adopted the merger agreement and will recommend that shareholders approve the agreement.

The company said that the transaction will be structured as a combination of Performance Food and Vistar Corp., a Denver-based foodservice distributor controlled by affiliates of Blackstone and Wellspring.

If the merger agreement is terminated, under certain circumstances, the company will be required to pay a $40 million break-up fee plus up to $7.5 million for expenses to Vistar. If the company elects to pursue an acquisition proposal submitted in writing prior to March 8, the fee will be $20 million. Blackstone noted that it has agreed to guarantee up to $30 million of the fee while Wellspring will back up to $10 million.

Also under the agreement, Blackstone and Wellspring will pay the company a $40 million termination fee if they breach their obligation to complete the transaction.

"We believe this transaction delivers outstanding value to our shareholders," Steven L. Spinner, president and chief executive officer of Performance Food, said in a news release.

"We are also excited about the opportunity to team up with Blackstone and Wellspring, who enthusiastically support our goals of growth, operational excellence and outstanding customer service."

Performance Foods said that it will also solicit superior proposals from third parties during the next 50 days.

The transaction is subject to receipt of shareholder approval and the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and is expected to be completed by the end of the second quarter.

Evercore Group LLC is the financial adviser for Performance Foods. Wachovia, Goldman Sachs and Credit Suisse are the financial advisers to Blackstone and Wellspring.

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