Greif & Co. was engaged to sell the company and achieve optimum liquidity for its shareholders. Greif & Co. determined that by positioning Allen Foods as the dominant broadline foodservice company in the Great Plains region, an aggressive auction process could be conducted soliciting the engagement of the three largest publicly-traded consolidators at the time―SYSCO, U.S. Foodservice and Performance Food Group.

Greif & Co. extolled the merits of Allen Foods’ strong market share and brand presence, loyal base of customers, strategically located distribution facility, and seasoned sales force. However, the company’s EBITDA margins were well below industry averages. Greif & Co. dedicated time with management to credibly add back non-recurring/extraordinary expenses and make a pro forma adjustment for the financial impact of acquiring Allen Foods’ fleet of leased trucks, turning lease expense―an operating cost that reduces EBITDA into depreciation which increases EBITDA and, thus, EBITDA margins. These adjustments added significant value to the Company that the sellers would have otherwise not captured.

Multiple strategic buyers expressed strong interest in acquiring Allen Foods. U.S. Foodservice, with the competitive tension of the auction process, submitted a preemptive bid to acquire the company. Greif & Co. completed the sale of Allen Foods to U.S. Foodservice, a wholly owned subsidiary of Royal Ahold N.V. (NYSE:  AHO), in a stock-for-cash transaction valued at approximately $100 million. On a trailing 12-months basis, Allen Foods sold at a multiple of 16.4 times EBITDA, substantially greater than the 8-10 times multiple the owners had hoped to achieve and far in excess of the 4.7 times trailing 12-months EBITDA at which Ahold was trading at the close, setting a new industry high watermark that exceeded the previous record of 12 times EBITDA.