Consumer Sector Comment – February 2014

Date

January saw the acquisition of Kitchen Craft, one of the UK’s leading suppliers of kitchenware products and accessories, by NASDAQ-listed Lifetime Brands for an undisclosed sum. Clearwater advised the shareholders of Kitchen Craft on the transaction.

Kitchen Craft was established in 1850 as Thomas Plant and has remained in family ownership ever since. The company sells a wide range of branded and own brand kitchenware products to an extensive customer base, ranging from independent stores through to larger chains, supplying over 2,600 customers both in the UK and across more than 70 countries worldwide. Lifetime Brands is a global provider of branded kitchenware, tableware and other home products, supplying the top homeware retailers in North America. Following on from its 2011 acquisition of UK tableware company Creative Tops, this latest transaction broadens the customer base of Lifetime Brands in the UK and reflects a healthy UK market for kitchen goods where growth has been strong on the back of successful TV programmes such as The Great British Bake Off.

Meanwhile, premium chocolate and desserts business Lily O’Brien’s – which was founded from a kitchen table in Ireland in 1992 – was acquired by Carlyle Cardinal International (CCI). Key Capital advised the shareholders of Lily O’Brien’s on the sale. CCI, founded by Carlyle and Cardinal Capital Group, was launched in 2013 to invest in small and medium-sized businesses across Ireland. Lily O’Brien’s represents CCI’s first investment. Mary O’Brien has grown the business, named after her daughter, from its small beginnings into a global brand that employs up to 260 people at peak production times. As well as a growing online business, Lily O’Brien’s supplies branded and own-label products to many high street retailers and a number of global airlines. This was one of a number of food-related transactions, alongside Hain Celestial’s acquisition of Tilda and Gores Group’s investment in Hovis.

After this strong start to 2014, we expect to see continuing international interest from both PE and trade in strong consumer brands.

More Deals

The Gores Group, a US-based private equity firm, acquired a 51% stake in the bread division of Premier Foods plc. The consideration of £30m includes deferred consideration and earn out of £15m which values the business at £87.5m. The business will operate as Hovis Limited, a stand-alone joint venture, and reported revenues of £654.6m for fiscal year ended 31 December 2013.

Hain Celestial Group acquired Tilda Ltd, the UK based global supplier of rice and rice products for a consideration of £217 million. Irwin D. Simon, Founder, President and CEO of Hain Celestial stated: “We are very excited by the strategic acquisition of Tilda, which expands our worldwide better-for-you product portfolio into the premium Basmati rice category along with other specialty rice products. We plan to grow the Tilda brand further using our existing solid distribution platform in the United States, Canada and Europe with Basmati and ready-to-heat rice product offerings.”

Vision Express Group Ltd has acquired 65 Rayner Opticians stores based in the UK for an undisclosed consideration. The acquisition complements Vision Express’ existing line of business and comes after the acquisition of 12 optical stores from Crown Eyeglass in 2013. Jonathan Lawson, CEO of Vision Express, said: “This is a very exciting time. The Vision Express brand and business has been performing strongly for the last three years. Therefore it is timely that we seek opportunities in the right location, to increase our market share and bring the Vision Express experience to our new customers.”

Starwood Capital Group, the US PE firm, purchased Four Pillars Hotels for an undisclosed consideration. The transaction includes a portfolio of five owned and leased hotels with one managed hotel in Oxfordshire and the surrounding areas, comprising 863 rooms in four star hotels.

US PE firm Cerberus Capital Management LP acquired 102 Spirit pubs for a consideration of £170m and 32 Punch Tavern pubs for an estimated consideration in excess of £40m. This follows Cerberus’s acquisition at the start of the month of Admiral Taverns for an estimated enterprise value of £200m from Lloyds Banking Group. Lloyds took control of Admiral which operates 1,100 pubs as part of a restructuring in 2009.

Ken Bartle and Peter Phillips have acquired Shoon Ltd, the UK-based shoes retailer. GA Europe sold its stake to the new owners, who also assumed the company’s debt. Further details were not disclosed. Bartle and Phillips, both long-standing footwear industry figures, have an established track record of backing successful footwear retailing businesses including Stead & Simpson and Gordon Scott. Their most recent venture was the revival and expansion of Jones Bootmaker, which was acquired in 2009 and successfully sold to Macintosh Retail in 2011 – Macintosh were advised in this transaction by Clearwater Corporate Finance.

Grasshopper Toys acquired Curious Minds Science Shop, a UK-based online science toys and games retailer. As a result, Curious Minds Science Shop will now become the science toys business unit of Grasshopper Toys. No further details were disclosed.

Stanley Gibbons Group acquired Murray Payne Ltd, a UK-based online commonwealth stamps retailer, for a consideration of £1m. Mike Hall, Chief Executive of Stanley Gibbons, said: “This acquisition is in line with Stanley Gibbons’ stated strategy of growing its market share of the rare collectibles auction market and is complementary with APEX Philatelics, which was acquired via the purchase of Noble Investments in November 2013.”