Deal focus: Monde Nissin develops a taste for Quorn

When UK-based Exponent Private Equity bought Quorn Foods from Premier Foods in 2011, it was a small business - an unloved subsidiary generating EBITDA of GBP18 million ($27 million) per year and with flat growth.

Quorn. a meat substitute derived from a fungus, is sold in the form of burgers or chicken fillets and as a range of own-brand ready-to-cook meals. Exponent concluded that the company had a strong market position with potential to grow globally and it acquired the business for GBP205 million. Intermediate Capital Group (ICG) provided GBP80 million in junior debt and equity.

Exponent set up a 10-strong team to boost sales volume and committed capital to supply chain improvements, product development and advertising and marketing. During the five-year ownership period, Ouorn Foods built up a retail presence in 15 countries. Sales reached GBP150.3 million in 2014, while EBITA came to GBP38 million. The PE firm then looked for a buyer to grow the business further.

"We set up an auction process to sell the business and there was a lot of interest from private equity firms and trade buyers. The auction had just started when we were approached by Monde Nissin," says Chris Graham, co-founder of Exponent. "They have heard about the business and they were keen to help develop its international products."

Philippines-based food conglomerate Monde Nissin is aggressively looking to build global and diversified consumer businesses, making three acquisitions in Australia in the last seven months alone. After few meetings with Exponent, the company agreed to buy Quorn Foods at an enterprise valuation of GBP550 million.

"Some other Asian trade buyers were interested in Quorn Foods and saw it as an attractive opportunity, but none of them moved as quickly as Monde Nissin," says Graham.

Monde Nissin, which produces instant noodles, baked goods, biscuits and snacks under a range of brands, is expected to support the expansion of Quorn Foods in Asia by leveraging its own distribution networks.

This is the first portfolio company that Exponent exited to an Asian buyer but the GP sees increasing evidence of investors from the region looking for assets in the UK. Bright Food's acquisition of breakfast cereal brand Weetabix and Hony Capital's purchase of PizzaExpress are prominent examples of this interest turning into action.

Philippines-based conglomerates are also becoming more acquisitive in overseas markets. The $2.2 billion transacted across 20 outbound M&A deals in 2014 was the most in four years, according to Thomson Reuters. Already this year, 25 deals have been announced worth a cumulative $1 billion.

Neither is Monde Nissin the Philippines food player to buy a business private equity. Last year, Universal Robina acquired New Zealand-based snacks maker Griffin's Foods from Pacific Equity Partners for $608 million.

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• Topics
• Exits
• Southeast Asia
• Europe
• Consumer
• Trade sale
• Consumer
• Southeast Asia
• Philippines