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Hearthside Food weighs sale to a PE consortium: Reuters
Posted on Monday, 16 April 2018 10:24
Buyout groups Partners Group Holding and Charlesbank Capital Partners are close to agreeing an acquisition of Hearthside Food Solutions that could be worth USD 2.40 billion, including debt, two sources close to the matter told Reuters.
According to these insiders, the US-based contract manufacturer used by Kellogg and PepsiCo is negotiating the final terms of a potential deal with the consortium, which outbid other private equity firms in a recent auction.
Hearthside Food, currently owned by Vestar Capital Partners and Goldman Sachs’ buyout arm, produces baked foods and snacks such as energy bars, cookies and pretzels for leading food companies in Europe and North America.
Sources observed that Partners Group and Charlesbank are paying about 11.0 times the group’s 12 months earnings before interest, taxes, depreciation and amortisation.
Should the talks be successful, an announcement could be made as soon as today, the people, who asked not to be identified as the situation is private, noted.
However, they also added that there can be no guarantee discussions will not fall at the last hurdle.
Hearthside Food was picked up by Goldman Sachs and Vestar for USD 1.10 billion from Wind Point Partners in 2014.
The company claims to be the industry’s largest food contract manufacturer and is also the largest private bakery in the US with 24 production facilities, including three in Europe.
Bloomberg first reported on the disposal of Hearthside Food in January, citing people familiar with the matter as saying the private equity owners are exploring a sale that could fetch around USD 2.50 billion.
No final decision has been made and the groups may decide against a sale, the sources noted, adding a spokesman for the potential target noted there was no change pending and he had no further information on the situation.
Zephyr, the M&A database published by Bureau van Dijk, shows the food manufacturing industry has had an active start to 2018, having featured in 465 deals announced globally since the start of the year.
Among those transactions was the USD 8.00 billion acquisition of Blue Buffalo Pet Products by General Mills.
In addition, Nestle’s confectionary business in the US is being acquired by Ferrero for USD 2.80 billion in the second largest deal.
© Zephus Ltd