July 28, 2010

Lion Capital to acquire French food firm

Private equity group BC Partners has agreed the sale of French frozen food retailer Picard Surgelés to rival Lion Capital for up to EUR1.5 billion (US$1.95 billion) including debt.

Lion Capital is the owner of the Findus Group, one of the chief frozen food companies in Europe. It also owns the Weetabix cereal and Kettle Chips brands. The group displaced other companies, including CVC Capital Partners, Eurazeo and Bain Capital, to secure exclusive privilege to talks with London-based BC.

It is expected that the deal will be finalised by the fourth quarter. It is subject to approval by European competition authorities, according to reports.

The news arrived a week after Unilever sold Findus, its Italian frozen foods business, to Birds Eye Iglo, which is jointly owned by private equity groups Lion Capital and Permira. The sale went for EUR805 million (US$1,047 million).

Last April, Pinnacle Foods, which is owned by US-based private equity group Blackstone, paid US$1.3 billion - over nine times its EBITDA - for the US frozen foods unit Birds Eye Foods, sources said.

Blackstone and PAI Partners are currently pondering the sale of United Biscuits for about US$3 billion. Meanwhile, Sara Lee in the US has hired investment banks to sell North American bread, now valued at US$1.5 billion.

BC Partners, which purchased Picard for EUR1.3 billion (US$1.69 billion) from Candover Partners in 2004, would gain two times its investment on the sale to Lion Capital.

"Despite a hard consumer environment in 2009, Picard continued to gain market share and has further significant growth opportunities in France and in Europe," said André François- Poncet, managing partner of BC Partners. "We trust that Lion Capital will be a good partner for Picard in the future."

Picard made sales exceeding EUR1.1 billion (US$1.43 billion) in the year ending on March 31.

Since the beginning of the year, BC Partners has returned some EUR2 billion (US$2.6 billion) to its investors following the completion of three initial public offerings. In June, investors gave BC an extension to the investment period on its latest fund, signaling that buy-out groups are winning time to organise their US$500 billion of unspent capital.