Deal in Focus: Solina returns to Ardian after four-year build-up

IK Investment Partners, which had held a majority stake in French ingredient provider Solina Group since a merger in 2012, recently entered exclusive talks with Ardian to sell the business. Awaiting approval from French working councils, the takeover will be financed via Ardian's €2.8bn MidCap Buyout fund and a debt facility from Crédit Agricole and Natixis. Investing alongside the GP are key Solina managers including CEO and founder Eric Terre, COO Laurent Weber and CFO Bertrand Vaz.

Headquartered in Bréal-Sous-Montfort, Solina provides ingredients to the food industry. The business employs 1,000 professionals in production sites, R&D centres and sales offices across 17 countries.

The SBO marks Ardian's return as a majority owner at Solina almost four years after partially exiting the business. In late 2011, the firm sold the majority stake it held in Belgian food business Sfinc via its small-cap funds to IK. The divestment led to a merger between Sfinc and French ingredient provider Savena – the latter had been in IK's portfolio since earlier that year.

The resulting group, renamed Solina, was split between IK, which secured a controlling 66% stake, and the management, which held 27%. Meanwhile, Ardian re-invested proceeds from the Sfinc sell-off to retain a 7% interest in the group.

From Brittany to the Nordics
"When we entered Savena in 2011, our plan was for the business to expand from its Brittany headquarters all across Europe," says IK partner Dan Soudry, "much in the same way our other food assets such as Labeyrie or Cérélia have done." In Savena's case, he says, the European roll-up plan came with a focus on the Nordic countries, IK's former home base and a region where the firm's contacts and expertise could come in handy.

Unsurprisingly, the first bolt-on target for Savena was a Swedish food service, Formidabel, picked up in October 2011. The business then set its sights on Belgium-headquartered Sfinc, acquired from Ardian Expansion in December 2011. Having absorbed Formidabel's €10m turnover and Sfinc's €70m revenues, Savena effectively doubled its own €80m turnover within less than a year.

In late 2013, Solina went back to France for its next bolt-on: food business Kerry Food Service, with €10m of revenues. The next two years marked the company's return to the Nordic region, with the add-ons of Danish SFK Food and Finnish Lihel, each representing €40m in turnover.

Sale plans for 2016 cut short
According to Soudry, all five Solina bolt-ons were backed by IK. Formidabel and Sfinc were acquired via a mix of equity and the debt put in place in 2011; the takeover of Kerry Food Service featured only the latter. The SFK Food and Lihel purchases were backed by fresh debt injected during a refinancing held in parallel with SFK's buyout in 2014.

By mid-2015, Solina's turnover had quadrupled from €80m in 2011 to more than €320m, with annual organic growth in the 6-7% region. "We also accomplished this by reorganising the way the company operated. We tried to make it evolve from its former local-based business model by reinforcing central functions such as procurement, HR and IT," Soudry says.

IK initially contemplated a sale for Solina for 2016; preparations were underway, with both strategic and private equity suitors expressing interest for the asset. The calendar was pushed aside once Ardian MidCap, which had prior contact with Solina's managers, received their support when it presented a fully financed bid for the company in September, according to Soudry.

People
Ardian – Bruno Ladrière, Mathieu Antonini, Daniel Setton, Emmanuel Miquel, Alexis Manet
IK – Dan Soudry, Rémi Buttiaux, Arnaud Bosc, Thibaut Richard

Advisers
Equity – DLA Piper (Legal, tax); BCG (Commercial due diligence); EY (Financial due diligence, tax).
Vendor – Willkie Farr & Gallagher (Legal); BNP Paribas (M&A).

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• Topics
• France
• Buyouts
• Exits
• Deal in focus
• France
• Ardian (formerly Axa PE)
• IK Investment Partners
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