Lamb Weston plans $450 million of debt for acquisition, eyes loan

By Sara Rosenberg

New York, Oct. 20 – Lamb Weston Holdings Inc. plans on using about $450 million of new debt to help fund its acquisition of the remaining equity interests in its European joint venture Lamb-Weston/Meijer for €525 million in cash and €175 million of common stock, company officials said in a call on Thursday.

The company is evaluating options for a new term loan for all or a portion of the debt, depending on market conditions, officials said.

However, if a term loan is not obtained, the company has ample liquidity under its existing undrawn $1 billion revolving credit facility to fund the transaction, officials added in the call.

Other funds for the purchase will come from cash on hand.

Pro forma for the acquisition, first-quarter fiscal year 2023 net leverage is expected to be around 3.2x, up from 2.7x but below the company’s long-term net leverage target of 3.5x to 4x.

Closing is expected in the second half of fiscal 2023, subject to regulatory approvals.

Prior to this transaction, Lamb-Weston/Meijer operated as a 50/50 joint venture between a wholly owned subsidiary of Lamb Weston and Meijer Frozen Foods BV.

Goldman Sachs is acting as financial adviser to Lamb Weston in connection with this transaction.

Lamb Weston is an Eagle, Idaho-based supplier of frozen potato, sweet potato, appetizer and vegetable products to restaurants and retailers. Lamb-Weston/Meijer is a supplier of frozen potato products in Europe, the Middle East and Africa.

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