Consumer Sector Comment – March 2014

Date

In February last year, we highlighted the vitamins, minerals & supplements (VMS) space in our first edition of Clearthought and this month has seen plenty of further activity in the sector. A key deal was Irish multinational group Glanbia’s acquisition of Nutramino in a deal advised by Clearwater International Denmark.

Nutramino was founded in 2002 and has a product range which covers energy bars, shakes and whey protein body-building supplements. The company is the leading player in the Scandinavian market for sports nutrition products, with a focus on sales in fitness centres and convenience stores. This position has been achieved through a unique “full service solution”, featuring a complete product, marketing and service offering. Outside of Denmark, Nutramino also has operations in Norway, Sweden and Finland. The acquisition opens up new distribution channels for Glanbia in a new region. Glanbia, which has its roots in dairy and owns brands such as Avonmore and Premier Dairies, entered the VMS market in 2008 with the acquisition of US whey-based supplement specialist, Optimum Nutrition. This was followed by the acquisition of Bio-Engineered Supplements and Nutrition (BSN), another US business, in 2012. The group now has sales of around €700 million in the segment, with the US accounting for around 70%.

Also in February, Grovepoint Capital acquired a majority stake in UK-based sports nutrition brand Grenade. Founded in 2009, Grenade develops and markets products for weight loss and weight gain which are designed to maximise workout effectiveness and aid exercise recovery. Grenade UK sells its products via GNC, Holland & Barrett, Bodybuilding.com, Walmart and Tesco. It also sells directly to the US military via stores on global marine corps bases. Grenade’s founders, Alan and Juliet Barratt, will maintain an ongoing role in the company and work with Grovepoint to help strengthen the company’s position. Kevin Peters, formerly of Maximuscle, will be joining the board of the company as a result of the investment. Grovepoint plans to accelerate the growth of the business via product development and geographic expansion.

Despite having one of the leading brands in the sector (PowerBar), Nestlé has made the decision to focus on categories with greater critical mass within the overall group portfolio and agreed the sale of its sports nutrition business under both the PowerBar and Musashi brands to US cereal group Post Holdings Inc. The transaction is expected to close in June. Post Holdings has been making acquisitions to expand its offering and in December the company reached separate deals to buy peanut butter maker Golden Boy Foods and Dymatize Enterprises, which makes protein powders and bars, for a combined $700 million. Post Holdings also purchased Premier Nutrition, a marketer and distributor of premium protein foods & beverages and nutritional supplements, in September.

There are plenty of signs that the sector will continue to fizz – Post Holdings and Glanbia are reported to be contesting the acquisition of Cytosport, owner of the Muscle Milk brand, from US house TSG Consumer Partners.

More Deals

Masonite International Corporation, the US-listed Canadian company that manufactures and sells residential and commercial doors and building materials, has acquired Door-Stop International, the UK-based distributor of composite exterior residential doors and door sets, for £30m in a transaction advised by Clearwater Corporate Finance.

Grovepoint Capital has acquired a majority stake in Grenade, the sports nutrition brand focusing on weight management. The deal was valued at an estimated £35m.

KOLAK Snack Foods Ltd has acquired Berkshire Foods Ltd and NC Snacks Ltd, the UK-based snacks manufacturers. Mr Billy Bhasin was a major shareholder in the companies. Kolak’s CEO Mr Ashok Lakhani, said: “This acquisition makes another important step in the development of Kolak Snack Foods. We continue to strengthen our position as a major quality snack manufacturer, with our customers at the heart of our business. The acquisition will help to grow our customer offer.” Kolak reported revenue of £60m in 2012 with an EBITDA of £4.3m.

Link Snacks Inc, the US-based snack producer, has agreed to acquire Unilever plc’s meat snacks business for an undisclosed sum. The transaction enables Link Snacks to enhance its presence in the meat snacks markets. As part of this transaction, Link Snacks will also acquire the Peperami and BiFi brands from Unilever and the manufacturing unit in Ansbach, Germany. Bifi is sold in Germany, Benelux, Austria and Switzerland, and Peperami retails in the UK and Ireland. Peperami and BiFi have combined annual sales of €60-80m (approx. £49-65m).

Dale Farm Ltd, a dairy-products manufacturer, has acquired Ash Manor Cheese Company Ltd, the Wrexham-based cheese manufacturer which specialises in cheese packing. The consideration was not disclosed.

Manufacturer and supplier of other food and agriculture products Edward Billington and Son Ltd has acquired TSC Foods, a producer and supplier of chilled and frozen products, from Key Capital Partners for an undisclosed consideration. This deal is estimated to be valued at £35m.

Wellness Foods Ltd has sold branded honey company Rowse Honey Ltd to Valeo Foods Group Ltd. Valeo Foods is a portfolio company of CapVest Ltd. Financial details were not disclosed.

Thomas Cook Group plc continues its strategy of reducing non-core assets with the sale of luxury tour operator Elegant Resorts Ltd to Al-Tayyar Travel Group, the listed travel agency operator from Saudi Arabia, for £14.3 million in cash. Dnata, a provider of air travel, ground handling and cargo services based in the UAE, has also agreed to acquire Gold Medal Travel Group plc, the UK-based tours and travels operator, from Thomas Cook Group for a total consideration of £45m. Dnata also gains control of OTA Netflights.com and the travel brand Pure Luxury. The transaction is in line with Dnata’s growth strategy to expand their offerings, strengthen the company’s inbound travel services and support continued tourism growth in the UAE.

B&B Investment Partners acquired Aromatherapy Associates Ltd, an aromatherapy products manufacturer and retailer, from Optivi Ltd. No financial details were disclosed. B&B Investment Partners is a private equity group launched by Alliance Boots Holdings, Mr Chris Britton and Mr Jean-Philippe Barade, in order to buy small and medium-sized businesses in the health and beauty sector.

Private equity firm EMERAM Capital Partners GmbH has acquired Americana International Limited, the UK-based manufacturer of clothes and owner of the “Bench” brand, from HgCapital for an undisclosed consideration. Revenues and profits in the last financial year at Americana had fallen, reflecting weak UK wholesale performance and declines in Europe, especially Germany. HgCapital acquired Americana International in 2007, in a secondary buyout transaction from Livingbridge for a consideration of £186m.

Pure Gym, a fitness clubs company, has signed a definitive agreement to merge with low cost gym operator The Gym Group for an undisclosed consideration. After the merger, the combined group will have around 100 gym sites. Peter Roberts of Pure Gym will become Chairman of the new company and John Treharne will be CEO. Pure Gym Limited is a portfolio company of CCMP Capital Advisors LLC, which acquired the company in May 2013. The Gym Group Limited is a portfolio company of Bridges Ventures and Phoenix Equity Partners Limited, which acquired the company in June 2013.

Samworth Brothers, (via Gibbs Croft Ltd) has acquired Soreen Ltd, the UK-based malt loaf manufacturer, from McCambridge Group Holdings Ltd for an undisclosed consideration. Products offered by Soreen, which employs 125 people, are sold in top supermarkets and independent retailers. Soreen was sold by Warburtons to Inter Link Foods in 2003, then in 2007 the McCambrige Group bought it with substantial backing from Barclays.

The Range has acquired Hooty’s Ltd for an undisclosed consideration. Both companies are operators of department stores in the UK. Hooty’s generated sales of £15m in 2012 and had a workforce of 161 employees.

UK-based cruise holiday agency Reader Offers Ltd has been acquired in a management buy-out from Mr Peter Beadles. The consideration was not disclosed.