Schwan's Co., maker of frozen foods like Tony's pizza and Mrs. Smith's pies, has hired an investment bank to weigh options that include a potential sale, sources familiar with the situation said this week.
The move comes as the the 70-year old company faces pressures in the slow-growing food industry that have driven consolidation and hiked up valuations. A potential deal could value Schwan's at more than $2.5 billion.
Marshall, Minnesota-based Schwan's is working with investment bank Piper Jaffray, the sources said, cautioning Schwan's could decide to sell the company in pieces or not at all.
Schwan's has roughly $260 million in earnings before interest, taxes, depreciation and amortization, the sources said. It is ranked by Forbes as one of the country's largest private companies.
Logical buyers for the company include CP Foods, the Thai company that last year acquired U.S.-based frozen food company Bellisio Foods.
The sources requested anonymity because the process is confidential. Schwan's and Piper did not respond to requests for comment.
Food companies once were able to rely on frozen food to draw in a certain cost- or time-conscious consumer. Trends have changed, though, and people now prefer fresh and healthy.
Some companies have sought to revive these products by investing in marketing and innovation to reposition them. Acquisition vehicle Nomad Foods, for example, was created with the intent of buying up such neglected brands. Nomad bought Iglo Foods Holdings, seller of Birds Eye frozen vegetables in Europe, for 2.6 billion euros ($3.1 billion) in 2015. Meanwhile, snack food company B&G Foods acquired General Mills' Green Giant frozen and canned vegetable business.
Earlier this year, Conagra Brands approached Pinnacle Foods about a deal that would bring together Healthy Choice and Mrs. Paul's fish sticks. The two were unable to agree on a price.
Schwan's traces its roots to a company started in 1948 by Paul and Alma Schwan and their son Marvin, Schwan's Dairy. Marvin helped grow that company beyond ice cream delivery to include juice, fish and drumsticks. The company delivers its products in Schwan's famous creamy yellow trucks, which are trademarked Inca Gold.
Its brands, which have expanded through multiple acquisitions, now include Tony's pizza, Freschetta pizza and Edwards desserts. It sells in retailers and directly to consumers' homes. It also has a large food service business.
Marvin Schwan, known as the "emperor of ice cream" and ranked by Forbes as one of the richest men in the world, died in 1993. When Schwan died, a portion of that wealth went to the charitable foundation that he created the year before his death. The foundation lost roughly $600 million in investments in offshore real estate, according to court proceedings.
Marvin Schwan's other brothers, who were also involved in the business, have since died as well. Dimitrios Smyrnios is currently CEO of Schwan's Co.