Consumer sector comment – May 2013

Date

This month has seen a flurry of activity in the food and restaurant sectors, especially from private equity. PAI Partners acquired R&R Ice Cream, the largest European private label ice cream manufacturer for an estimated £717 million from Oaktree Capital. R&R makes own-label ice-cream for a range of retailers, including Tesco and Carrefour and for branded manufacturers such as Nestle. The backers said they would support R&R’s next phase of growth and plan to invest in the company’s international expansion. Founded in 1985 as Richmond Ice Cream, R&R has grown via a number of acquisitions. In 2006, it merged with German Ice cream manufacturer Roncadin Gmbh to form R&R Ice Cream and has also acquired Rolland and Pilpa in France, Durigon in German, and Eskigel an Italian own label ice cream manufacturer. Earlier this year, the company also acquired YooMoo frozen yoghurt.

The deal with PAI was unusual as it included the simultaneous acquisition of Frederick’s Dairy, a Lancashire-based dairy for £49 million, which makes ice creams and iced refreshment drinks under licence to Cadbury, Del Monte, Vimto and Britvic. Recently, Fredericks has partnered with leading biscuit brand, Oreo to manufacture the first Oreo-branded ice-cream in the UK, featuring a black Oreo flavoured cocoa cone, as well as Oreo cookie pieces in the ice-cream. The Oreo biscuit brand is already popular with children and teenagers and the ice cream is expected to broaden its appeal.

Meanwhile in the restaurant sector, LDC backed the £50 million MBO of premium restaurant group, D&D, which owns over 30 restaurants in Leeds, London, New York, Paris, Istanbul and Tokyo, including Coq d’Argent, Quaglino’s and Alcazar in Paris. The deal will enable the company to fund further expansion, both domestic and international. Another private equity backed deal this month, was Bowmark Capital’s backing of £30 million MBO of Drake & Morgan, a London-based pub and restaurant group, founded in 2008 by the Imbiba Partnership, a bar and restaurant investment partnership, and leisure entrepreneur Jillian MacLean. The group has plans to open a further 8 sites by the end of 2015.

Deals

R&R Ice Cream Plc, the largest European ice cream manufacturer by volume has been acquired by private equity firm PAI Partners for an estimated £717m. At the same time, R&R acquired Frederick’s Dairy for £49 million.

Drake & Morgan, a restaurant operator which owns several restaurants in the City including; The Folly and The Drift, has been acquired in a £30m MBO backed by Bowmark Capital. The private equity group behind Las Iguanas said there was potential to open up to 70 locations across the UK.

The premium restaurant group D&D London which owns 30 restaurants across the UK and internationally has been acquired by Lloyds Development Capital in a £50m MBO. The restaurant operator owns iconic restaurants such as, such as Coq d’Argent in the City, Quaglino’s in Mayfair, the Bluebird in Chelsea and Plateau in Canary Wharf. The deal will help the company to fund further domestic and international expansion plans.

The premium rail travel company Amber Travel has been acquired by private equity ECI Partners, valuing the company at over £50m. The deal provided an exit for Primary Capital which invested in 2005. The company is expecting a turnover growth of 20% in 2013.

Cooke Bros Holdings, the privately owned soft drink business which owns brands such as Calypso Soft Drinks and Mr. Freeze, has been acquired by Cott Beverages for an undisclosed sum. The acquisition is part of Cott’s diversification strategy to bring new soft drink packaging and freezeable formats. The completion is subject to OFT clearance and is expected to close in June 2013.

The coffee roaster Bolling Coffee, the creator of the Grumpy Mule brand has been acquired by the Irish coffee giant Bewley for an undisclosed sum. Both companies have a reputation of sourcing directly fair trade coffee, which will provide significant synergies.

Exante Diet, a manufacturer and online retailer of meal replacement products has been acquired by the Hut Group, for an undisclosed sum.

Past Time Trading, a retailer of gifts and jewellery that into administration in February, has been acquired by WH Smiths. The new owner, who has not disclosed the size of the deal, plans to use the brand in a similar way to the Gadgetshop.

HMV, the UK’s last high street music chain, has been acquired by the restructuring specialist Hilco. The company that already owns the Canadian operations has acquired over 130 HMV high street shops for an estimated £50m. Hilco hope to replicate the success they had in the Canadian market which was acquired two years ago.