Japanese strategic to buy Australia's Allied Pinnacle from PEP

According to a filing, Nisshin will pay A$574 million ($410 million) plus net debt at the time of completing the transaction. The Australian Financial Review said the all-cash deal was worth A$950 million and valued Allied Pinnacle on a low double-digit earnings multiple.

The buyer, which manufacturers a range of baking ingredients and processed foods with a global footprint, is pursuing simultaneous pushes into New Zealand and Thailand.

For PEP, it represents the completion of a roll-up play begun in 2015 with the purchase of Pinnacle, the Australian bakery unit of Irish food giant Kerry Group, for a reported A$250 million. The private equity firm acquired local flour producer Allied Mills two years later from GrainCorp and Cargill Australia for A$455 million.

A second bolt-on was realized later in 2017 with the addition of New Zealand frozen foods maker Leader Products. PEP bought the company via an existing portfolio company, Patties Foods, which the firm purchased in 2016 for A$230 million. As of June 2017, the Allied Pinnacle platform had completed five bolt-on acquisitions.

The plan was to build the combined company into a leader in the frozen specialty baking, in-store baking and bakery ingredients spaces. Allied Pinnacle currently supplies 2,500 bakeries in Australia and is estimated to generate A$750 million in sales annually. PEP’s return also includes the sale last year of an Allied Pinnacle property portfolio to local real estate investor Qualitas for A$400 million.

Bolt-on acquisition plays are recognized as an effective approach to mature Asian markets when buy-and-build risks related to asset integration and high valuations are properly managed. 

PEP is currently raising its first secure assets fund, which reached a first close of A$600 million last December. The vehicle has a hard cap of A$1 billion. The GP is expected to launch its sixth private equity fund later this year with a target of around A$2.5 billion.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Australasia
• Consumer
• Trade sale
• Australia
• Pacific Equity Partners
• Exit
• M&A