South Korean company buys Schwan’s in $1.8 billion deal

Nov. 15, 2018

Minnesota-based Schwan’s Co. has reached an agreement to sell a majority stake of the company – not including its iconic home-delivery business for frozen foods – to a South Korean corporation with global operations.

According to a news release issued by Schwan’s, the transaction with  CJ CheilJedang will include 80 percent of Schwan’s Co. and specific subsidiaries that focus on foods sold in retail and grocery channels and food-service venues. The Schwan family will retain 20 percent ownership in the businesses being sold to CJCJ and also will retain 100 percent ownership in Schwan’s Home Service Inc., which represents the legacy home-delivery business that Marvin Schwan launched in 1952. Schwan, who lived in Sioux Falls, died of a heart attack in 1993 at age 64.

According to a news release from CJ CheilJedang,  the South Korean company will pay $1.84 billion in cash. The transaction is expected to close in the next 60 to 90 days. The sale will also include the company’s manufacturing and logistics operations and various professional and administrative services.

“This is an exciting time at Schwan’s,” said Paul Schwan, a Schwan’s board member and son of the company’s founder, in the news release from Schwan’s.  “Over the past 66 years, our family, with the help of thousands of employees, has proudly built a very unique and successful food business that reaches consumers virtually everywhere they eat. By becoming a part of an innovative, global team such as CJ CheilJedang, Schwan’s will be positioned to achieve new levels of growth in the spirit of the vision put forth by my father, Marvin Schwan, so many years ago.”

Schwan’s Co. began in 1952 as a one-man-and-a-truck home-delivery business operating in rural Minnesota. Today, Schwan’s is a major U.S. food manufacturer and marketer with 12,000 employees and brands such as Schwan’s, Red Baron, Freschetta, Tony’s, Mrs. Smiths and Pagoda.

The purchase agreement with CJCJ is the result of a strategic process led by the Schwan family, the company’s board of directors and members of the senior management team to identify the right company to invest in the long-term future of Schwan’s, the company said in its news release. Once the transaction is closed, Schwan’s will be operated as a subsidiary of CJ Foods America Corp., and its operations will continue to be headquartered at corporate offices in Marshall and Bloomington, Minn. Additionally, the senior management team at Schwan’s will remain in place.

“We are entering a new and exciting era at Schwan’s, and we look forward to working closely with our new team members to further strengthen our operations and accelerate growth for the benefit of consumers, customers and employees,” said Schwan’s CEO Dimitrios Smyrnios. “CJ CheilJedang is an extraordinarily world-class and innovative company well-known for their success worldwide, and we are very impressed with their global growth plans and investments in the United States. The future for Schwan’s and our people is very bright.”

CJCJ’s infrastructure of manufacturing facilities in the U.S. will grow from five plants to 22, the South Korean company said in its news release. It also will gain access to logistics, distribution and sales networks across the U.S. Previously limited to selling its Bibigo brand mainly through club channels such as Costco, the acquisition of Schwan’s will enable CJCJ to rapidly expand its brands in the U.S. and eventually into Canada and Mexico, the company said.

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South Korean company buys Schwan’s in $1.8 billion deal

Minnesota-based Schwan’s Co. has reached an agreement to sell a majority stake of the company – not including its iconic home-delivery business for frozen foods – to a South Korean corporation with global operations.

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