Kevin Dowd January 09, 2017
A victor has seemingly emerged in L Catterton’s auction of portfolio company Ferrara Candy: Onex, which is negotiating final terms on a deal that would value the sweetmaker at around $1.3 billion, according to Reuters. The Illinois-based business owns a number of iconic candy brands, including Now & Later, Brach’s, Red Hots, Trolli and Jujyfruits.
The past three years have brought a significant uptick in private equity activity in the American consumer food products sector. On average, 79 PE deals were completed annually in the space from 2010 to 2013, but that number rose to 105 during the past three years, according to the PitchBook Platform. Activity peaked with 115 transactions in 2015, declining to 98 last year (in line with an overall PE decrease across all sectors).
The majority of those investments, though, come with smaller price tags, making Onex’s approaching purchase of Ferrara Candy a rare billion-dollar transaction. Companies in the space to receive less substantial (yet still significant) backing in 2016 include snack producer Utz Quality Foods, gyro meat maker Kronos Foods and organic food preparer Snap Kitchen—another L Catterton portfolio company.
That the Connecticut-headquartered firm keeps popping up is no coincidence. With nine investments in the US food products sector since the start of 2010, L Catterton is tied with KKR, Thomas H. Lee Partners and others for the third-most deals in the space during that timeframe. The only two busier: Wind Point Partners, with 14 deals, and Arbor Investments, with 11.
And where does America’s PE-backed food come from? Primarily the West Coast, Mid Atlantic and Great Lakes regions, which combined have served as the home to nearly 58% of all US food products deals since the start of 2010. Activity is particularly prodigious in the West: Together, California, Washington, Oregon and Hawaii are home to more private equity deals in the space than the Midwest, New England and the South combined.
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