
PAI Partners to acquire IFF's Savory Solutions in USD 900m deal
European sponsor PAI Partners is to acquire food ingredients producer Savory Solutions Group from New York-listed artificial aromas and flavours manufacturer IFF in a USD 900m deal.
The transaction values the business at approximately USD 900m, valuing it at 14x its EBITDA over the last 12 months, according to a press release from the vendor.
The acquisition is subject to customary regulatory approvals and is expected to be completed by Q2 2023, it said.
Unquote sister publication Mergermarket reported in November 2022 that PAI Partners and Partners Group were among the buyout groups admitted to the second round of bidding for the company.
JPMorgan and Lazard had been marketing the business off EBITDA of roughly EUR 70m, with the company expected to fetch a valuation of at least 10x, as reported. Leverage could land anywhere between 4.5x and 5.5x as private credit funds line up financing arrangements, Unquote sister publication Debtwire reported last month.
Frutarom Savory Solutions was added to International Flavors & Fragrances' portfolio as part of its USD 7.1bn acquisition of Israeli peer Frutarom in 2018. The move to sell the business comes just over a year after it agreed to sell its Microbial Control unit to Germany's Lanxess for USD 1.3bn as part of its strategic portfolio review, sister publication Mergermarket reported. IFF has also mandated Centerview Partners to sell its aroma chemicals and natural botanical extracts business, as reported.
Cash proceeds from the sale of Savoury Solutions net of taxes and expenses will be primarily used to reduce IFF's outstanding debt, it said in the same press release.
PAI will invest in the business via its Fund VIII, marking the second deal from the fund. a source close to the situation told Unquote. The firm's latest flagship fund was registered with Luxembourg's Registre de Commerce et des Sociétés on 28 September 2021. It has a target of EUR 7bn and a hard-cap of EUR 8.5bn, according to Unquote Data. PAI manages EUR 26.4bn of dedicated buyout funds, according to the press release.
The GP will seek to grow the business through international expansion in Europe and North America, both organically and through acquisitions, according to a press release from PAI. This will include the plant-based and clean labels segments, which it views as attractive, the press release added.
PAI's previous food ingredients investments include the Danish food ingredients company Chr Hansenm, which PAI exited in April 2012. Most recently, the firm acquired Spanish food retailer Uvesco in December 2021, Unquote reported.
PAI Partners declined to comment.
Company
Savory Solutions Group provides a range of savoury ingredients and blends, most notably under the Wiberg and Piasa brands. The solutions are used by food manufacturers, butchers and food service players to improve texture and taste, as well as to extend the shelf life of their products. The Group operates 17 manufacturing facilities and nine innovation sites, with over 1,800 employees. It serves more than 11,000 clients across Europe, North America and Asia and generates turnover of approximately EUR 470m.
People
IFF − Frank Clyburn (CEO).
PAI Partners − Gaëlle d'Engremont (partner, head of food and consumer).
Advisers
Vendor − J.P. Morgan, Lazard (corporate finance); Cleary Gottlieb Steen & Hamilton LLP (legal).
Equity − Rothschild, Nomura (corporate finance); Willkie Farr & Gallagher (legal).
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