Schreiber to Acquire Beatrice's Two Processed Cheese Plants

Schreiber Foods, a privately-held food manufacturer, and Beatrice Cheese, a division of ConAgra, have entered into an agreement in which Schreiber will purchase two processed cheese plants from Beatrice. The plants are located in Waukesha and Monroe, WI.

In addition, Schreiber and Beatrice have agreed to a long-term supply agreement that will allow Beatrice to continue to market processed cheese under its Healthy Choice, County Line, Pauly, Munchee and other brand names. All assets of the two plants, including the facilities and equipment, will transfer to Schreiber Foods. Terms of the transaction, which is slated to be finalized in the next couple of weeks, were not disclosed.

The purchase agreement was reached between two companies who are not only competitors but at times adversaries. This adversarial relationship includes a court case in which Schreiber sued Kustner Industries, Beatrice Cheese and Great Lakes Cheese for infringement on patents Schreiber holds for cheese packaging equipment.

In August 1998, a jury found in favor of Schreiber and awarded Schreiber $26.2 million, $7.9 million of which Beatrice was required to pay. However, there were other legal issues that needed to be addressed, and late last month, 19 months later, the judge dismissed the jury's verdict. An attorney for Kustner says the company obviously is pleased with the decision. Schreiber, meanwhile, plans to appeal.

The legal battle, however, doesn't appear to be stopping the purchase of the plants. And for Schreiber, already a leader in the processed cheese market, the acquisition means an even firmer hold of that business.

"This acquisition and long-term supply agreement with Beatrice further enhances our leadership position within the process cheese industry," says Larry P. Ferguson, president and CEO, Schreiber Foods Inc. "Customers from both companies will benefit from the efficiencies of this transaction."

The Waukesha cheese processing facility, built in 1958 by Milwaukee Cheese Co., employs about 225 people, while the Monroe facility, built in 1976 by Dorman Cheese Co., has approximately 115 employees. Beatrice plant employees will become Schreiber employees. Deborah Van Dyk, director of legal affairs, Schreiber Foods, says it's too early to say what the company plans to do with the plants in the future.

For its part, Beatrice Group President and COO Russ Bragg says that Beatrice will still have a significant role in the industry despite the fact it is selling two plants. Beatrice has five other natural cheese facilities nationwide that are not affected by the agreement.

"This agreement allows us to focus on other aspects of the cheese business, including marketing major brands … and distributing imported specialty cheeses to foodservice and retail customers," Bragg says.

No decisions have been announced about whether Beatrice will stay in the foodservice and industrial aspects of the cheese business or about where the company, which has operated corporate offices for Beatrice Cheese out of Waukesha, will move its offices to. The company is looking for space in the Waukesha area, a ConAgra spokeswoman says. Meanwhile, the retail brands, as part of Beatrice Foods, are headquartered in Indianapolis. CMN

Other top stories in this week's issue of Cheese Market News:

• What's so wrong with ag market concentration? Industry weighs in
• February cheese production higher than last year, lower than January
• Sargento to add on to Kiel, WI, plant
• And the UF milk debate goes on…

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