The potential for sale of Fresh Express has been a big investment thesis on Performance Foods over the last year, which said not that long ago that it would be looking into strategic alternatives for the division, including a sale. While the sale (and excellent sale price) is ultimately a good thing for Performance Foods, it also represents a failure of management to execute. This is a valuable brand, controlling more than 40% of the bagged salad market, and has a blue-chip list of clients, including Yum! Brands
But at a minimum, the management recognized that it was not succeeding and chose to cut bait. Performance can now go back to its other broadline businesses, in which it has proven to be extremely competitive. Chiquita, for its part, continues to rebound smartly from what was a near-fatal business condition in late 2001 and has made smart moves to diversify away from its core banana business.
Finally, Chiquita's purchase of Fresh Express gives it a big door into some of the largest restaurant chains in the world, giving it a much easier path to compete against Fresh Del Monte
Just a great example of a transaction that will instantly be beneficial to both sides: Performance Foods gets cash for a division that it proved incapable of running optimally, and Chiquita gets a valuable new addition to its portfolio of food products, a billion dollars or so of annual revenues, and a gold-plated roster of new customers.
Bill Mann owns shares of McDonald's and routinely orders their salads. Funny that particular option wasn't really plumbed in "Supersize Me," eh? The Motley Fool's disclosure policy can be accessed here.