PEP exits Griffin's Foods to Philippines buyer for $608m

Griffin's was founded in 1854 and is the leading snack foods producer in New Zealand. It is best known for biscuit brands such as Cookie Bear, Gingernuts and MallowPuffs. Gingernuts, introduced in the 1930s, remain New Zealand's best-selling biscuit with an estimated 200 consumed every minute.

PEP acquired the company in 2006 through a carve-out from French food conglomerate Danone at an enterprise valuation of NZ$385 million. The private equity firm previously examined trade sale options for the business in 2011 at a reported valuation of up to NZ$750 million including debt, but no transaction was forthcoming.

URC will pay NZ$100 million immediately and the balance on completion, according to a regulatory filing. The deal requires approval from the New Zealand government. Company management held a minority stake in the business and will exit alongside PEP.

Lance Gokongwei, president and CEO of URC, said the company had been looking for acquisitions to support its goal of becoming a significant regional player in snack foods and beverages. He noted that Griffin's is a good strategic fit for URC's existing portfolio, highlighting the company's emphasis on "using natural ingredients; ensuring traceability of source; and providing healthy alternatives."

The transaction is also expected to accelerate Griffin's international growth strategy by leveraging URC's distribution networks in the Philippines and other Asian countries.

During PEP's ownership period, Griffin's established an international export division, building on a strong presence in Australia and New Zealand to sell its products in more than 20 countries. The company also completed the NZ$55 million bolt-on acquisition of Nice & Natural Wrapped Snacks in 2007 and invested NZ$80 million in two new manufacturing centers.

"Working with the Griffin's management team has been a fantastic experience and a great example of collaboration in a sector we know well. Griffin's celebrated its 150th anniversary this year and we're confident the growth story will continue under the ownership of URC, facilitating further growth into ASEAN markets," David Brown, managing director at PEP, said in a statement.

According to URC, Griffin's had an EBITDA of NZ$78 million in 2013. This reportedly compares to around NZ$40 million when PEP bought the business.

Financial statements filed by the parent company NZ Snack Food Holdings show consolidated net sales of NZ$280.8 million, down from NZ$293.4 million the previous year. Net profit slumped from NZ$20.5 million in 2012 to NZ$5.1 million in 2013, due to the drop in sales and finance expenses - tied to debt originally accrued when PEP bought the business - rising from NZ$15.7 million to NZ$23.7 million.

Two PEP portfolio companies - Spotless Group and Asaleo Care - have gone public in the last two months, with the private equity firm making a partial exit from the former and a full exit from the latter. It also exited Peters Ice Cream to UK-based R&R for an undisclosed sum. Earlier this year PEP reached a first close on its firth fund, which is targeting A$2 billion in core equity to be supplemented by co-investment by a handful of LPs.

URC is one of the largest branded consumer food and beverage product companies in the Philippines with a market capitalization of $7.6 billion. The business was founded by John Gokongwei - father of the current CEO - in 1954 and it is still owned by the family through diversified conglomerate JG Summit Holdings.

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• Topics
• Exits
• Australasia
• Southeast Asia
• Buyouts
• Consumer
• Pacific Equity Partners
• Australia
• New Zealand
• Consumer
• Exit
• Trade sale
• Philippines