Lancaster Colony has brokered a deal to acquire a sauces and dressings production facility in Atlanta, Georgia, from Winland Foods.
The US food business said its is buying the 300,000 square-foot plant, complete with 250,000 sq ft of manufacturing space, for around $75m.
Lancaster Colony CEO David Ciesinski said that the “agreement to acquire this production facility” is a key addition to the company’s “manufacturing network”.
He added: “This facility will benefit our core sauce and dressing operations through improved operational efficiency, incremental capacity and closer proximity to certain core customers, while enhancing our manufacturing network from a business continuity standpoint.
“We evaluated several scenarios to support our continued growth and determined this asset purchase to be the most practical and cost-effective solution for our long-term business needs.”
Lancaster Colony, along with its subsidiary T. Marzetti, manufactures and sells speciality food products across the retail and foodservice channels.
Retail offerings include Marzetti dressings and dips, New York Bakery garlic breads, and Sister Schubert’s dinner rolls.
Lancaster also has licensing agreements with various restaurant chains for products such as Olive Garden dressings, Chick-fil-A sauces and dressings, and Subway sauces.
As part of the agreement, the employees at Winland Foods' Atlanta facility will join the “Marzetti team”.
Subject to necessary closing conditions, the transaction is expected to be finalised in the first quarter of next year.
Winland Foods, backed by the European investment firm Investindustrial, specialises in manufacturing private label and branded foods for retail and co-pack customers, with a focus on the meal preparation category.
Operating 14 facilities across North America and Europe, the company produces pasta, sauces, dressings, jams and plant-based proteins, among others.
In May, Lancaster Colony stopped the production of Flatout and Angelic Bakehouse bakery brands and closed the facilities where the products were made.
The shutting down of the Flatout facility in Saline, Michigan, and the Angelic Bakehouse plant in Cudahy, Wisconsin, impacted 80 employees, 40 at each site.
Lancaster Colony also exited the Bantam Bagels business in May 2022, citing “underperformance”.
Lancaster Colony reported its first-quarter results at the end of October. Group sales were up 1.1% at $466.6m.
Retail sales, however, dropped 1.1% to $239.6m, while the foodservice segment saw a 3.5% increase to $227m.
Net income climbed to $44.7m from $43.9m.
“Looking ahead to our fiscal second quarter and the remainder of our fiscal year, we anticipate retail segment sales will continue to benefit from our growing licensing program, driven by new product introductions such as Subway sauces and Texas Roadhouse dinner rolls," Ciesinski said.
"Our newly launched New York Brand Bakery gluten-free garlic bread will also add to the retail segment’s sales."
