Dean Foods Company has agreed to purchase Friendly's Ice Cream from Friendly's Restaurants, a leading ice cream and dining brand in the US, for $155m in cash.
Friendly's Ice Cream reported net sales of $166m last year.
It produces packaged ice cream and other frozen dessert products, including single-serve sundae cups, novelty items, cakes and rolls.
Founded in 1935, Friendly's distributes these products in more than 8,000 retail outlets.
Dean Foods CEO Gregg Tanner said: "Coupled with the momentum of Dean Foods' current regional brands, the Friendly's brand will be a catalyst in our strategy to grow our existing ice cream business and branded portfolio.
"Friendly's is an ideal complement to our other heritage brands across the country and fills a manufacturing and retail ice cream void in our nationwide footprint.
"Working together with the senior leadership team of Friendly's Ice Cream, we look forward to continuing to grow the manufacturing and retail ice cream business."
The acquisition of Friendly's Ice Cream is expected to be immediately accretive to margins and earnings, and Dean Foods expects that the acquisition will add approximately $0.06 earnings a share accretion this year.
Dean Foods intends to fund the transaction with cash on hand and existing revolving facilities.
Besides acquiring Friendly's manufacturing and retail ice cream business, Dean Foods will purchase the Friendly's trademark, as well as all intellectual property associated with the ice cream business.
A leading family-dining restaurant chain with more than 260 locations in the US, Friendly's Restaurants will continue to be owned and operated by an affiliate of Sun Capital Partners, and allow the use of the Friendly's trademark under a license agreement entered into as part of the transaction.
The transaction is expected to close late in the second quarter of this year, subject to regulatory approvals and other customary closing conditions.
Friendly's Ice Cream will continue to operate out of its facility in Wilbraham, Massachusetts.
Rothschild served as financial adviser to Dean Foods on the transaction, and Gibson Dunn offered legal support.
Lazard Middle Market served as financial adviser to Friendly's Ice Cream on the transaction, and Morgan, Lewis & Bockius was the company's legal adviser.
