America's largest yeast supplier, Red Star, to go to world's largest yeast supplier, Lesaffre

Universal Foods Corp. has pulled its yeast out of the antitrust fire, onto the selling block and very possibly into the hands of the world's largest yeast producer. Lesaffre et Compagnie of Paris, France signed a letter of intent to acquire Universal's Red Star Yeast & Products division. Under the current agreement, Lesaffre will pay Universal $125 million in cash.

Lesaffre, based in Paris, France, is privately owned. The company is the world's leading producer of yeast and yeast extracts. Red Star Yeast is the largest North American supplier of yeast to the commercial bakery market.

"A completed transaction will align Red Star Yeast with a global manufacturer, greatly enhancing Red Star's prospects for growth," said Kenneth P. Manning, Universal's CEO. "With the sale of Red Star, Universal Foods will be an entirely new company focused on colors and flavors."

Universal also produces ink-jet inks.

The Lesaffre deal is contingent on the completion of a definitive agreement and the customary due diligence. The letter of intent was announced Aug. 9.

The pending sale follows Universal's May decision to explore this divestiture. In late May, Manning indicated no longer fit the company's strategic direction. (See related article, Universal Foods Restructuring, Plans to Divest Red Star Yeast ).

Manning said "Red Star's prospects for worldwide leadership in yeast can be best maximized through a combination with another business where it will be part of a core global strategy."

Just days prior, the U.S. Dept. of Justice completed a two-year review of the Red Star division's possible role in anticompetitive practices in the yeast industry. (See related article, Justice Department Closes Its Yeast Investigation).

Red Star's 1999 revenues were $140 million. The company has approximately 350 employees and maintains manufacturing operations in Baltimore, Milwaukee and Oakland.

Edited by Bob Sperber