Advantage exits Pokka in trade sale
In a week marked by trade sales in the food and beverage industry, Tokyo-based Advantage Partners has announced it will exit its entire 40% stake in Pokka Co., a Japanese coffee and soft drink maker to Sapporo Holdings, the local brewery major which already has a minority 21.4% stake in Pokka. Sapporo will also take another 24.1% shareholding from: CITIC Capital, the private equity arm of CITIC Group, China’s largest conglomerate owns 1.9%, and Meiji Seika Kaisya, a Japanese confectionary owns 21.4%.The equity stake totals JPY 21 billion ($251.2 million), and Sapporo will take on a residual JPY11 billion ($131.8 million) in loans.
With the premium Sapporo has agreed to pay to other shareholders, plus the loans that the company will take over, the deal values Pokka at around JPY36.2 billion ($433 million). The exit is a particularly successful result for a boom-era LBO, particularly with Japan buyouts largely under a dark cloud at the moment.
Advantage Partners and CITIC Japan Partners delisted Pokka in September 2005, purchasing a 100% stake in an LBO for around JPY24 billion ($217.7 million at historical yen rates). The mezzanine finance provider for the transaction was Tokio Marine & Nichido Fire Insurance Co., Ltd. In 2009, Sapporo bought a 21.4% stake from Advantage Partners for JPY10 billion ($119.7 million).
A source closed to the deal told AVCJ, "Advantage brought V-shape growth to Pokka after the acquisition. I think that Sapporo decided to acquire Pokka based on the company's strong branding and product development skills as well as increased sales."
Another private equity source commented that with the exit, the firm was making decent returns after six years invested in the company, and LPs were happy with the deal.
Advantage Partners said in a statement, "Following the MBO, Pokka succeeded in strengthening its profitability by implementing company-wide efforts to enhance awareness and to reform its earnings structure, expanding its foods business around its strong, high-quality lemon and soup brands, and formulating a new growth strategy which placed increased presence in the Asian market."
Sapporo, which is now free from ex-shareholder Steel Partners, is expected to help expand the group's businesses further, especially overseas.
Many have come to believe that Japan is not offering much in the way of large-ticket transactions. However, considering the shrinking economy, the nation still has hidden gems that are making returns. This deal could signal (tepid) market recovery alongside the emerging SME space.
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