American snacks giant Mondelez bites into CPE Capital's crackers biz
American snacks giant Mondelez International has agreed a deal to acquire Australian cracker business Gourmet Food Holdings for more than $400 million, marking a huge return for the business’ private equity owner in less than three years.
Mondelez, best known for owning Cadbury and Trident Gum, is expected to incorporate Gourmet Food Holdings and its brands into its Australian portfolio and launch an assault on the premium cracker market.
It is understood Mondelez and Gourmet Food Holdings’ owner, Sydney-based private equity firm CPE Capital, signed the deal on Tuesday following an auction run by boutique Miles Advisory.
The deal is subject to customary regulatory approvals and is expected to complete in coming months. Gourmet Food Holdings, whose brands include premium cracker labels OB finest, Olina’s Bakehouse and Crispbic, was pitched to buyers with about $200 million annual revenue and north of $40 million EBITDA.
It’s a chunky Australian deal for Mondelez, which was previously one of Australia’s biggest biscuit makers through its subsidiary Lane Biscuits Pty Ltd, which was acquired by Kraft Foods in Australia in 2002.
It continues to own a bunch of biscuit brands sold in Australia including belVita, Orea, Ritz and cracker business Captain’s Table.
It’s expected to use the Gourmet Food Holdings’ brands to expand into premium entertaining products, which is where CPE Capital has had success taking the business.
Investor sources said CPE Capital has worked with the supermarkets, who see the deli segment and things like fancy crackers as high margin and high growth, much like alcohol was for them a decade ago.
Mondelez Australia Holdings Pty Ltd, the local entity, is estimated to record about $1.5 billion a year revenue from the sale of confectionary and biscuits. Its parent, US-listed Mondelez International, recorded $US26.6 billion ($34.7 billion) revenue in 2020 and the company’s shares imply a $US77.9 billion market capitalisation.
The sale marks a big return for CPE Capital, which investor sources said made more than five-times its money on Gourmet Food Holdings in 2 and a ½ years.
Gourmet Food Holdings was founded as a packaged seafood company in 2009 and entered the premium-style crackers market in 2015. CPE Capital, then called CHAMP Private Equity, acquired the business in 2018. EBITDA more than doubled under CPE’s ownership.
CPE Capital hired Miles Advisory to market the business to potential buyers and run an auction late last year. Interested parties were told the business was on track to make $250 million revenue in the coming 12 months, which would be more than double what it was making three years ago.
About 20 per cent of Gourmet Food’s sales come via exports to New Zealand, UK, United States and the like, while CPE’s investment helped fund the company’s new manufacturing plant in Melbourne.
Kidder Williams advised Mondelez.
Article reposted from AFR Street Talk, American snacks giant Mondelez bites into CPE Capital’s crackers biz, 9 March 2021