Consumer Sector Comment – February 2015


Back in October last year, we commented on high levels of activity in the pet sector: eye-catching transactions included the acquisition by Mars of P&G’s US pet foods business for around €2.6bn and Spectrum Brand’s acquisition of P&G’s European pet food business. As we anticipated, interest in the sector has remained extremely keen as buyers continue to  be attracted by:

  • Opportunities to add higher-growth brands to existing portfolios by acquiring innovative smaller companies – Towards the end of 2014, Petco (the number two US retailer of pet products) acquired Drs. Foster and Smith. Drs. Foster and Smith was founded in 1983 as a group of four veterinary clinics and it has developed into a leading multichannel pet pharmacy business with its own popular branded products – including joint care supplements, pet care products and dog and cat food. In the UK, Pets at Home has also demonstrated the appeal of the veterinary market to pet retailers with its 2013 acquisition of vet chain Vets4Pets;
  • Dependable cash flow generation, even in recession – As demonstrated by the LBO of Petsmart, the leading US pet retailer, right at the end of the year by a group of investors led by BC Partners. The Petsmart deal was the biggest US private equity transaction of 2014 with a value of €7.7bn, representing a 39% premium to the share price;
  • Diversification opportunities – There have long been links between the food and petfood industries and last month, JM Smucker – better known for Smucker’s jelly and Jif peanut butter – acquired premium pet company Big Heart Pet Brands (once known as Del Monte) for €5.1bn. Smucker was attracted by the higher growth opportunities offered by the pet sector. JM Smucker is well known to Clearwater International, having advised the company on its acquisition of a minority interest in leading Chinese oat company Seamild in 2012.

Clearwater International continues to have an active dialogue with companies right across the pet sector and expects to see plenty more transactions in 2015.


Selected UK Consumer Deals

Carpet manufacturer Victoria plc has acquired the Whitestone Weavers group of companies in a €18.5m transaction. The initial cash consideration was €7.7m with a deferred cash consideration of €8.8m payable over the next three years. This is Victoria’s third acquisition in just over a year, following the earlier acquisition of Westex and Abingdon Flooring. BGF provided €13.5m of investment support to Victoria in September 2014, its first investment in a publicly listed company.

The Foschini Group (TFG), a South African clothing and footwear retailer, has acquired Phase Eight from TowerBrook. The transaction values Phase Eight at €320m. TFG said “the product and value offering of Phase Eight will combine exceptionally well with TFG’s current brands, with the store and concession portfolio creating a platform for the expansion of TFG’s brands internationally.”

Kohlberg Kravis Roberts & Co. LP, the US-based private equity firm, has acquired Ltd, the leading online rail ticket retailer and rail information provider, from Exponent Private Equity. Trainline was planning an IPO worth €660m in 2014.

Phoenix Equity Partners has acquired holiday leisure park company Bridge Leisure Parks Ltd. In a related transaction, Bridge acquired Silver Sands Holiday Park – located in Scotland. Phoenix will provide funds for Bridge Leisure to develop its parks and supply cash for new acquisitions.

Active Private Equity has agreed to acquire a 50% stake in Honest Burgers Ltd, the gourmet burger restaurant chain, from its founders for a consideration of €9.5m.

Liberation Group Ltd, one of Britain’s biggest independent pub and restaurant businesses and a portfolio company of LGV Capital Ltd, has acquired Butcombe Brewery Ltd, Bristol’s biggest independent brewer and pub owner. Butcombe Brewery Ltd has reported a turnover of €m for the year 2014. The transaction is in line with Liberation Group’s growth strategy. The combined group will benefit from stronger buying power and supply opportunities.

CCI International, a manufacturer and distributor of clay pigeon targets, has acquired Promatic Ltd, a manufacturer of clay pigeon traps, from NVM Private Equity. The transaction allows Promatic to provide a one-stop-shop for all clay pigeon shooting products and services.

Development Securities plc and Pemberstone Group Ltd acquired an unknown stake in Extreme Cool, the indoor ski centre, climbing wall and leisure complex, from Bridges Ventures and others for €20.9m.

Puig SL of Spain has acquired British perfume and bodycare brand Penhaligon’s Ltd from Fox Paine & Company LLC. The move is part of the Spanish group’s strategy to expand its presence in prestige perfumery.

Promethean Investments backed an MBO of Sofa Brands International, the UK-based sofa manufacturer whose brands include Parker Knoll, Duresta and G Plan.

Starwood Capital Group LLC announced that, through a controlled affiliate, it has acquired The Town House Collection Holdings Ltd, an Edinburgh-based luxury boutique hotels operator.