HP Hood and National Dairy Holdings to join forces

Dairy Foods, Dec, 2002 by John Kaneb

DALLAS--In a move that will create a more balanced competitor to industry-leader Dean Foods, National Dairy Holdings plans to merge with the' venerable HP Hood of Chelsea, Mass.

After a story appeared in the Boston Globe on Nov. 13, the Dallas-based National Dairy announced that it had signed a letter of intent to combine the two businesses. John Kaneb, president and chief executive officer of HP Hood, will become the chairman and chief executive officer of the newly combined company. From the national dairy side Tracy L. Noll will continue to serve as president and chief operating officer of the company. Tex Beshears and Allen A. Meyer will serve as vice chairmen.

The combined company would be the second-largest full-line dairy processor in the country with annual sales of more than $3 billion. Dean Foods, also of Dallas is the nation's largest dairy processor, with estimated sales of about $10 billion.

NDH currently operates 33 plants primarily in the Midwest, the south and the northeast, and in acquiring those plants it has built an extensive distribution network. Hood's operations are comprised of seven plants, most of them in New England, but among them is a state of-the-art facility in Winchester, Va. that produces extended shelf life products including NesQuik, Lactaid and Coffee Mate. Hood is the sole or primary manufacturer of some of those products.

NDH's portfolio includes strong regional brands of fresh milk, ice cream and cheese including Borden, Kemp's and Helluva Good. But currently it is a company with national capabilities but no real national brands.

Kaneb's family made its fortune in the commodity oil business before purchasing and breathing new life into Sun Oil Co. He did the same thing with 150-year-old Hood, purchasing it in 1995 after a series of ownership changes had left the company worse for wear. Since then Hood has introduced a number of new products, including a premium ice cream line and its LightBlock Bottle, while at the same time emerging as a key competitor with Dean and its predecessor Suiza, both in New England and in the national value-added arena. Hood was selected as Dairy Foods' Processor of the Year in 2001.

The three operatives at National Dairy are veterans of the dairy industry and in particular of Texas-based companies like Southland and Suiza which were the pioneers of super-regional and national dairy building. Noll served as chief financial officer for Suiza in 1990s, and some close to the Texas dairy industry say he is more comfortable in a behind-the-scenes role, rather than as the most visible executive. The huge dairy cooperative, Dairy Farmers of America owns a 50% share of NDH.

RELATED ARTICLE: Merger at a Glance

Expected close: Year end

Combined plants: 40

Combined annual sales: About $3 billion

Major brands: Borden, Kemps, NesQuik, Lactaid, Coffee Mate

New headquarters: Undisclosed

* John Kaneb, who has lead a seven-year turnaround at HP Hood, will serve as chairman and CEO of the new company.