Aiming for a larger piece of the $600 million airline dessert pie, Mrs. Beasley’s has purchased Los Angeles-based Ernst Mueller’s Fine Baking, which sells pastries to caterers for foreign-based airlines’ first-class and business-class seats on flights from Los Angeles International Airport to Pacific Rim destinations.
The estimated $2 million deal was negotiated and closed just prior to the terrorist attacks on the U.S., and Kenneth Harris, chief executive of Century City-based Mrs. Beasley’s, said the resulting decline in airline business had not dampened his enthusiasm for the acquisition.
Two business brokers not connected to the deal estimated the value at between $2 million and $2.5 million, an amount equal to Mueller’s annual revenues, plus a small premium. Company founder Ernst Mueller, 70, sold the business prior to retiring.
Officials of the company, a holding of Kayne Anderson Investment Management Inc., refused to disclose the transaction price.
More than 80 percent of Mrs. Beasley’s $17 million in annual sales stems from Internet and mail orders for $30 to $250 gift baskets containing mini-muffins, brownie bars, varieties of cookies and its signature power-sugared chocolate fudge truffles.
About 70 percent of Mueller’s $2 million annual revenue base comes from airline contracts.
The airline dessert business accounts for 10 percent of the $6 billion of food airlines worldwide buy each year and is dominated by firms like City of Industry-based Fantasia Desserts and New York-based Love and Quiches Desserts.
Harris acknowledged that the decline in the airline industry will offset any gains accrued from Mueller’s $2 million annual revenue base 70 percent comes from the airlines through the remainder of the year. But he anticipates that revenues will increase to $20 million in 2001.
Immediately following the acquisition, Mrs. Beasley’s laid off Mueller’s 24 bakers, all members of the Hotel Employees & Restaurant Employees Union. They were given severance pay and an offer for temporary work during the Christmas holiday season, when the company adds 350 workers to the 35 full-time employees at its Carson plant, company and union officials said.
The deal was brokered by Dick Israel, managing partner of Beverly Hills-based Dick Israel & Partners Inc., who was retained by Mueller.
