PEP sells Griffin's to Universal Robina for $700M after capital return, refinancing in 2013

Monday 21st July 2014

Pacific Equity Partners has sold Griffin's Foods to Universal Robina Corp for $700 million after the Australian private equity firm pulled out capital from its investment and saddled the New Zealand biscuit maker with debt last year.

The sale comes after accounts for NZ Snack Food Holdings show the Griffin's holding company made a capital return of $192 million in a share repurchase in the same year PEP refinanced the maker of Gingernuts, Mellow Puffs and Huntley & Palmers crackers and Eta brand snacks. The group had interest bearing debt of $442.4 million as at Dec. 31, up from $234.6 million a year earlier, according to financial statements lodged with the Companies Office. The $274.5 million of bank debt matures in January 2016, while $167.9 million of mezzanine notes mature in January 2019.

NZ Snack Foods reported a 75 percent slump in profit to $5.1 million in calendar 2013, as its finance costs climbed by more than half to $23.8 million. Revenue fell 4.3 percent to $280.8 million. Gross margins were largely unchanged at 53 percent. Operational cash inflow more than doubled to $34 million, and the group held cash of $34.8 million as at Dec. 31.

The deal is subject to Overseas Investment Office approval, and ends PEP's eight-year ownership of the snack foods maker. Chief operating officer Alison Taylor will take over as chief executive once the sale if completed.

"We believe Griffin's is a natural strategic fit to our existing snack foods portfolio given its strong brand heritage in New Zealand - a country trusted worldwide in having high credibility when it comes to food quality, safety and authenticity," URC chief executive Lance Gokongwei said in a statement. URC is a Philippines-based food and beverage company

PEP tried to sell Griffin's in 2011 after struggling to find a buyer. It was reportedly looking for a price in the range of seven to nine times earnings, which were about $108 million at the time.

The Australian private equity firm bought Griffin's for $292.4 million in 2006 from French food group Danone at an enterprise value of $385 million, and later acquired the Nice & Natural wrapped snacks business for $55 million.

PEP invested $180 million into Griffin's operations, creating two manufacturing centres in Auckland and buying the Nice & Natural business, it said.

Credit Suisse and First NZ Captial were exclusive M&A advisers to Griffin's.

BusinessDesk.co.nz

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