Consumer sector comment – May 2011

Date

Food and Drink represents the largest manufacturing sector in the UK, accounting for 14 per cent of the UK’s entire manufacturing sector with a gross value added of £21.8bn and is growing at a faster rate than most of other sectors, according to the UK Trade & Investment department.

Despite the tough economic conditions, the soft drink’s market, in particular, registered a 4.1% growth in volume and 5.8% increase in value, reaching 14,585 million litres and £13,880 million respectively in 2010. This is the fastest annual rate of growth in the last seven years, proving that the UK remains one of the largest food and drink markets in Europe.

Bottlegreen capitalising on the growth in the adult premium soft drinks market (estimated to grow at a rate of 15% per year), has shown that strong performances will continue to attract private equity to invest in the sector and we anticipate trade buyers will continue to acquire strong growing brands.

Deals

Jimmy Choo Limited, a manufacturer of shoes and accessories for women headquartered in the UK, has been acquired by Labelux Group Gmbh, a luxury goods holding company based in Austria for a minimum estimated consideration of £500 million. Tamara Mellon, Jimmy Choo’s founder and chief creative officer, and Joshua Schulman, the CEO, are investing in the Labelux subsidiary created to acquire the firm and will both continue to hold their positions after the transaction which is expected to be completed by June 2011.

A&NN Capital Fund Management Limited, an investment firm based in Russia, has acquired Waterstone Books, a retailer of books based in the UK, for £ 53 million from HMV Group Plc. Under the terms of agreement £ 40 million will be paid on completion and the remaining £ 13 million will be paid on 31st October 2011. The transaction is subject to the approval of HMV’s shareholders, the pension trustees, HMV’s lending banks and the pension regulator. The deal is expected to be completed by the end of June 2011.

Bottlegreen Drinks Company Limited, a manufacturer and distributor of premium adult soft drinks headquartered in the UK, has been acquired by SHS Group, a Northern Irish-based FMCG holding company, for an undisclosed value from Piper Private Equity Limited. As a result of the sale, Piper reported it has achieved a 5x multiple on its four year investment, after it put £5m into the brand in 2007.

Aspinall’s Club Ltd, a casino operator based in the UK, has been acquired by Crown Ltd, a company engaged in gaming and entertainment based in Australia, for approximately £ 36 million, from Aspinall’s Group Ltd. It was simultaneously announced that Crown has acquired the Holiday Inn property in Perth for an undisclosed value.

All Saints Retail Limited, the fashion retail chain based in the UK, has been acquired by Lion Capital LLP and Goode Partners LLC, private equity firms based in the UK and US respectively, for an enterprise value of approximately £105 million. Post acquisition, Kevin Stanford, All Saints’ founder, will retain a 15% stake while Lion and Goode will hold a 65% stake and an 11% stake, respectively. Lloyds Banking Group will continue to fund All Saints’ business activities and help the company meet its targets over the coming years.

Brookmann Home Limited, an investment group based in the UK, has acquired Dawson Home Group Ltd (DHG), a manufacturer of bed linen products based in the UK, from Dawson International Plc, a manufacturer of cashmere and bed linen products, for £ 6.5 million. Under the terms of agreement, Brookmann will pay £4 million in cash and £ 2.5 million will be paid for certain inventories related to the DHG business which are currently held by another Group company of Dawson International. The transaction will allow Dawson International to focus on its core cashmere activities and Brookmann Home to expand its manufacturing activities in overseas.

Britvic Plc, the manufacturer of beverages like mineral water and soft drinks headquartered in the UK, has acquired Quinn’s, a soft drinks distributor based in Ireland, from C&C Group Plc, a manufacturer, marketer and distributor of alcoholic beverages headquartered in Ireland, for an undisclosed value.

Brandywine Bookmaking LLC, an operator of sports betting facilities based in the US, has been acquired by William Hill Plc, a gaming, betting, online casino and poker sites operator headquartered in the UK, for $ 15.65 million. The transaction will be funded through William Hill’s reserves that will pay $ 14.25 million in cash and will provide a convertible loan of $ 1.4 million. The deal is expected to complete in 2012.

Crowne Plaza Inc., a hotel in the UK, has been acquired by Redefine International Plc, a hybrid property investment and development company based in the UK for £12.75 million, from Pedersen Hotels, a hotel operator group based in the UK. The transaction has been financed mainly through debt, mezzanine capital and internal cash resource. After the acquisition, Redefine will enter into a new franchise agreement with Six Continents Hotels Inc, a hotel management company based in the UK, to operate the hotel as Crowne Plaza Hotel. The deal is expected to be complete by 1st June 2011.

Silentnight Group Ltd, a manufacturer of beds and mattresses based in the UK, has been acquired by H.I.G. Capital LLC, a US based private equity firm for an undisclosed value. Silentnight Group went into administration as it had deficit of £ 100 million in its pension fund.

The Royal Berkshire Hotel, a hotel in the UK, has been acquired by Exclusive Hotels, a company that offers hospitality services based in France, for £ 15 million. Royal Berkshire was previously operated by Jarvis Hotels under the Ramada brand.

David Rowland and Jonathan Rowland, private investors from the UK, have acquired a 36% stake in Hamleys Limited, a toys and games stores operator.