Suiza to Acquire Morningstar Group

Suiza Foods Corp. said it will buy Dallas-based Morningstar Group Inc. for about $960 million in equity and assumed debt to create the largest dairy company in the U.S. The purchase will add Morningstar’s coffee creamers and dessert toppings to Suiza’s dairy business. Morningstar and other pending purchases would make Suiza, also based in Dallas, bigger than the dairy industry’s current No. 1, Dean Foods Co. Morningstar, an affiliate of Dallas-based buyout firm Hicks, Muse, Tate & Furst Inc., would be Suiza’s eighth acquisition this year. It seeks to build up its dairy business and cut costs. Suiza’s principal dairy holdings include Swiss Dairy in California, among others. It also owns Reddy Ice, the largest packaged-ice company in the U.S. Morningstar’s holdings include International Delight and Mocha Mix coffee creamers, Second Nature egg substitute and Lactaid lactose-free and lactose-reduced products. Suiza Foods stock fell $2.44 to close at $51.50 on the New York Stock Exchange; Morningstar shares jumped $2.63 to close at $42.63 on Nasdaq. Under the deal, each share of Morningstar common stock will be exchanged for 0.85 share of Suiza, or about $45.85 a share, a premium of almost 13% over Morningstar’s closing stock price Friday.