Texas firm buys Friendly's Ice Cream

DALLAS -- By scooping up Friendly's Ice Cream, an iconic brand in America's Northeast, Dallas-based Dean Foods Co. will be able to expand its reach and gain access to some innovative snack items that could be rolled out to retailers nationwide.

That rationale was offered Tuesday by Dean's chief executive Greg Tanner, as the nation's largest dairy processor briefed analysts on the $155 million purchase and the company's first-quarter profit picture.

Profit for the quarter that ended March 31 was $39.2 million -- more than a $110 million swing from a year-ago loss of $73.74 million. Profit per share was 43 cents, up from a loss of 78 cents a share a year ago. Not counting one-time events, profit per share was 45 cents, far outpacing the company's earlier guidance and analysts' estimates of 38 cents a share.

The company's stock shot up early Tuesday but by midday was trading closer to the opening price of $18.31 a share. The stock has gained about 14 percent in the last 52 weeks.

The Friendly's purchase will give Dean access to a much-loved brand and helps fill in its "branded" portfolio of products. The company spun off well-known brands such as Silk and Whitewave years ago, leaving the Dallas operation as primarily a seller of fluid milk. That's the least sexy, and least profitable, part of the business.

The purchase, which was announced late Monday, "fills a manufacturing and retail void in our nationwide footprint," Tanner said. The deal is expected to close late in the second quarter.

Dean will acquire the Friendly's brand name but not the restaurants that sport

the name. Friendly's restaurants, with more than 260 locations in the United States, including several in Manatee-Sarasota, will continue to be owned by an affiliate of Sun Capital Partners Inc. and will license back the use of the trademark.

Friendly's existing senior restaurant management team will continue to lead the restaurant business.

Dean will continue to produce Friendly's ice cream in a facility in Wilbraham, Mass., that for more than 45 years has produced Friendly's packaged ice cream, frozen dessert products, including single-serve sundae cups, cakes and rolls, along with ice cream for Friendly's restaurants.

Its popularity in the Northeast is akin to Blue Bell's popularity in the South. Some Friendly's items could be expanded to national sales under existing Dean brand names, such as Dean or Mayfield.

Friendly's Ice Cream distributes products in more than 8,000 retail locations across the United States and has seen 105 percent growth in the retail business over the past five years. Sales in 2015 were $166 million.

The current Friendly's leadership team will remain on board, Tanner said.

Friendly's Ice Cream, which was started in 1935 in Springfield, Mass., by brothers Curtis and Prestley Blake at the height of the Great Depression, has spent 81 years as a leader in the ice cream industry.

This story was originally published May 10, 2016 at 11:37 PM with the headline "Texas firm buys Friendly's Ice Cream ."