Lyceum buys EAT from Penta Capital

Although the deal value was not disclosed, it was confirmed to be less than £100m. Lyceum secured its stake via the Lyceum Capital Partners Fund II, a £255m vehicle raised in 2008. The company's founders and management will retain a substantial stake in the business following the transaction.

Penta had already put EAT up for sale in 2008, attracting interest from Advent International and Morgan Stanley Private Equity – however, the global financial crisis prevented a deal from materialising.

PricewaterhouseCoopers was again mandated to run an auction process in this latest attempt to sell the business. Penta is understood to have reaped a return multiple of around 3x its original investment.

Lyceum had been considering investing in EAT a couple of years ago, and was impressed by the company's performance since then – especially in a difficult economic environment. It also believes EAT is ideally positioned to benefit from a gradual recovery in consumer confidence.

The main goal for EAT going forward will be to accelerate its store rollout program across the UK, with both management and Lyceum aiming for a network of more than 300 branches. Performing bolt-on acquisitions could be considered, but would remain a secondary strategy.

Debt
HSBC arranged debt facilities to finance the acquisition. Leverage represented less than 50% of the deal value.

Previous funding
Penta Capital acquired a significant minority stake in EAT as part of a £39m refinancing of the company in 2005. The acquisition of the stake from 3i also included an £18m debt facility provided by Barclays Capital.

The firm stated EAT had been an "extremely successful investment", as the business managed to double in size despite the downturn.

Company
Founded in 1996, EAT offers a range of soups, sandwiches, salads and hot drinks freshly prepared in-house every day. The company operates out of 110 branches – up from 45 at the time of Penta's original investment. Turnover has also grown from £29.1m to £85m over the past five years.

People
Philip Buscombe led the deal for Lyceum. Penta Capital was represented by Torquil Macnaughton. Niall MacArthur is the founder and managing director of EAT.

Advisers
Equity – Altium Capital, Sam Fuller (Corporate finance); Javelin, Michael Fine (Commercial due diligence); PricewaterhouseCoopers, Chris Glazier (Financial due diligence); Travers Smith, Paul Dolman (Legal); Highwire, Sandra Aldridge (Management due diligence); Intuitus, Calum Stewart (IT due diligence); GVA, Jason Sibthorpe (Other due diligence).
Vendor – Dickson Minto, Andrew Todd (Legal).
Company – PricewaterhouseCoopers, Simon Boadle, Sean Williams (Corporate finance); CMS Cameron McKenna, Peter Smith (Legal); DLA Piper, Richard Crossfield (Legal).

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• Topics
• UK / Ireland
• Buyouts
• Exits
• Consumer
• Secondary buyout
• Horizon Capital (formerly Lyceum Capital)
• HSBC
• PricewaterhouseCoopers
• CMS Cameron McKenna
• Penta Capital Partners