Chicago-based Conagra Brands Inc.
plans to acquire Milwaukee-based Sandwich Bros. of Wisconsin
, a division of Kangaroo Brands Inc.
The transaction is expected to close in January for an undisclosed price.
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Salem Kashou (top left) with his staff.[/caption]
Kangaroo, which makes pita bread and pita chips, was founded in 1979 by John and George Kashou. It is located in a 55,000-square-foot space at 7620 N. 81st St. In 2012, Kangaroo created the Sandwich Bros. line, frozen breakfast and entrée flatbread sandwiches, which are distributed to grocery stores, club, convenience and mass merchandisers nationally.
Also in 2012, the company sold the Kangaroo brand trademark and the pita chip division to Conagra for an undisclosed price. The deal included the company’s pita chip plant at 8222 N. Granville Woods Road on Milwaukee’s northwest side. The company uses the name under license with Conagra.
Sandwich Bros., which has about 200 employees, disclosed it had about $60 million in revenue in the 12 months ending in November. The division has helped Kangaroo grow
rapidly. Last year
, Kangaroo added 70 employees and began searching for a second facility to make room for its growth. There are now about 180 full-time employees in Milwaukee and 75 contract/temporary employees, all of whom Sandwich Bros. is converting to full-time employees, said Salem Kashou, president of the Sandwich Bros. business.
Conagra would integrate Sandwich Bros. into its frozen business, and plans to leverage the same branding, said Kristine Mulford, spokeswoman for Conagra. The company has not disclosed how Sandwich Bros. operations in Milwaukee may be impacted.
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Kangaroo makes frozen handheld breakfast, lunch and snack sandwiches, including Chicken Melts, under the Sandwich Bros. of Wisconsin brand name.[/caption]
“Right now it’s business as usual. We’ll have more information to share once we reach the close of the sale,” Mulford said.
The agreement with Conagra stipulates that the existing Sandwich Bros. operations and employees will remain in Milwaukee, Kashou said. The scale of Conagra will allow Sandwich Bros. to increase its production capacity, since it is out of room at its current facility. It has not yet been determined where the additional production would take place, he said.
"As a family, we decided this would be the best way for our company and our employees to keep up with the demand,” Kashou said. "It’s growing beyond our capacity here, we’re out of space and we needed production ASAP.
"That’s on their radar, they understand the need, they understand the growth rate, they understand our capacity. They're going to do as much as they can keeping this plant full tilt until such time as they need to add more room somewhere.”
John and George Kashou, both of whom are retired, are the sole owners of Sandwich Bros. They will be available for consulting after the sale, he said.
"I’ll be part of the integration and I’ll be part of the company for the forseeable future," Salem Kashou said.
In the integration with Conagra, the Kangaroo Brands company would eventually get dissolved,
"We are very pleased with Conagra's shared enthusiasm of Sandwich Bros. and know they have the resources and expertise to continue our legacy. Our incredible growth over the past five years is attributed to the contributions from our loyal employees, business partners and consumers. For that, my brother John and I express our sincerest gratitude," George Kashou said.
Conagra is one of the largest food companies in North America, with annual sales of about $8 billion. It makes familiar products under brands like Marie Callender’s, Reddi-wip, Hunt’s, Healthy Choice, Slim Jim and Orville Redenbacher.
"Adding the Sandwich Bros. business to our portfolio is another step in Conagra Brands' ongoing work to accelerate growth," said Sean Connolly, president and chief executive officer of Conagra Brands. "This acquisition will bring Conagra unique capabilities and expertise within the frozen handheld category, which we look forward to leveraging for further growth and extension into additional Conagra brands."