Quadrant buys Australia's VIP Petfoods for $313m
Quadrant Private Equity has agreed to acquire Australia-based VIP Petfoods, the world’s largest producer of fresh chilled pet food, for A$410 million ($313 million).
The capital will be used to help the company grow domestically and internationally. In recent years, Quadrant has acquired a number of companies - with founders and management retaining minority stakes - and helped them to scale up before exiting via IPO.
With VIP, Tony and Christina Quinn, who founded the business in 1994, will continue to hold an interest and the existing management team will remain in place. The company operates six manufacturing sites, employs over 600 staff, and produces more than 150,000 metric tons of pet food each year. Chris Hadley, managing director of Quadrant, told Reuters that VIP's annual EBITDA is A$50 million.
In recent years, VIP has launched in the US, securing a distribution agreement with Texas and Louisian-based supermarket chain HEB Texas Grocery. Other key export markets include Canada, South Korea and Japan.
"VIP has built up an impressive position in the Australian pet food industry and has established a truly leading manufacturing capability. We believe there are opportunities to further implement growth and strategic initiatives to enhance the brand and product in Australia and throughout the world," said Hadley said in a separate statement.
Part of the private equity firm's investment thesis is rising demand for premium pet food and care products, which is driven by a trend towards the "humanization" of pets.
The thesis already proved out with City Farmers, Australia's third-largest pet services business. Quadrant paid A$93 million for an 87% stake in the company in September 2013 and then agreed to sell it to veterinary services provider Greencross for A$205 million - comprising A$155 million in cash and A$50 million in stock - in June 2014.
The VIP transaction comes out of Quadrant's seventh fund, which closed at A$850 million in early 2014. PwC, Gilbert + Tobin, Deutsche Bank and Advancy advised Quadrant on the deal, while PwC and Couper Lawyers worked with VIP.
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