9-293-084
REV: AUGUST 30, 2001

RICHARD S. RUBACK

Eskimo Pie Corporation
In early 1991, Reynolds Metals, the makers of Aluminum Foil and other aluminum products, decided to sell its holding of Eskimo Pie, a marketer of branded frozen novelties. Reynolds had few interests outside its aluminum and packaging business, and the Eskimo Pie Corporation, with roughly $47 million in sales, accounted for less than 1% of Reynolds revenues. Reynolds planned to use the proceeds from the sale of Eskimo Pie to fund investments in its core aluminum business.
Eskimo Pie was 84% owned by Reynolds Metals, and 4% owned by the Reynolds Foundation. The remaining 12% of the Eskimo Pie was held by various Reynolds family members and a small group of outside investors.
Goldman Sachs, a New York investment banking firm, was retained to assist with the sale of
Eskimo Pie. Goldman estimated that the sale price of Eskimo Pie would be about 1.2 times 1990 sales, or about $57 million. Nestle Foods paid a comparable multiple for Drumstick, another ice cream novelty company, in 1990. Goldman organized an auction for Eskimo Pie, and Nestle was the highest of six bidders with a price of $61 million.
Mr. David Clark, President of Eskimo Pie Corporation, recognized that the sale of Eskimo Pie to
Nestle would mean the end of its independence. Nestle was likely to consolidate its ice cream novelty businesses by eliminating Eskimo Pie’s headquarters and management staff. He had struggled to find a way to keep the company independent since he first learned of the sale. But Clark had been unable to raise sufficient funds to purchase Eskimo Pie in a leveraged buyout, and the sale to Nestle seemed inevitable.

The Eskimo Pie Corporation
Background
Eskimo Pie, a chocolate covered bar of vanilla ice cream, was the first ice cream novelty. Its history appears on the Eskimo Pie box: