Cobalt Capital reaps 2.5x on Barat exit

José Rojo
06 May 2015

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Cobalt Capital has reaped a 2.5x return following the sale of its 55% stake in French wine label producer Barat Étiquettes to US business Multi-Color Corporation (MCC).

Barat's divestment has followed an "extremely competitive" negotiation process intermediated by Rothschild that was initiated in Q3 last year, according to Cobalt. Unsuccessful suitors include a Spanish industrial group and investment funds.

The transaction marks the second attempt by MCC to acquire Barat. The Ohio-based industrial group competed with Cobalt when the GP picked up the company in December 2010.

Founded in 1916, MCC has expanded worldwide via a targeted acquisition strategy over the past few decades. Previous purchases include European label specialists such as Monroe Étiquettes in 2010, La Cromografica and Warszawski Dom Handlowy in 2011, and Glasgow-headquartered Labelgraphics in 2012.

Having failed to acquire Barat in December 2010, MCC will now pick up a markedly different business – one that moved away from its family structure under Cobalt's ownership. Shortly after becoming a shareholder, the GP named MB Entreprendre's Manuel Lenglet as Barat's new CEO.

Following his appointment, Lenglet centralised the company's support functions and launched a digital equipment capex programme, which the vendor claims resulted in significant productivity gains.

Previous funding
The trade sale generated a 24% IRR on Cobalt's initial investment in December 2010, as part of a buyout. Although Cobalt did not disclose the value of the original transaction, market sources place it around the €27m mark.

The GP acquired a 55% shareholding in Barat from its founders, who kept a 25% stake. Management retained control over roughly 20% of the capital structure.

The buyout featured a senior debt facility provided jointly by Banque Populaire Atlantique and CIC Finance, half of which had already been paid back by Barat's exit.

Cobalt drew equity from its Cobalt Investment FCPR fund. Launched in July 2004, the firm's €150m vehicle has since targeted leveraged buyout transactions to acquire majority stakes in companies valued in the €20-300m range, according to unquote" data.

According to Cobalt, the vehicle will not be used to carry out any more investments, except to build-up existing portfolio companies.

Cobalt's interest in Barat stemmed from the niche represented by commercial labelling within the wine industry. The sector, the firm believed, offered solid organic growth prospects and differentiation opportunities within the fragmented, relatively small French market.

It was Cobalt's ambition at the time to take advantage of Barat's consolidated position within the south-west of France to expand across the country. The firm was unsuccessful in adding any further acquisitions during the five-year holding, however, which it attributes to vendors' high price expectations.

Company
Founded in the 19th century, Barat Étiquettes produces commercial labels for the French wine and spirits industry. Headquartered in Port-Sainte-Foy, the business manages five production sites in the country, including Barat Etiquettes and Clos Carillon.

Employing a workforce of 215, Barat most recently reported around €30m in revenues and €6m of EBITDA, and claimed a 12% market share in the French wine commercial label sector.

People
Cobalt Capital was represented by founding partner Christophe Fercocq and CEO Julien Berger-Perrin. Nigel Vinecombe is CEO at Multi-Color Corporation and Sharon Birkett is vice president at the US company.

Advisers
Vendor – Ernst and Young, Jean François Nadaud, Renaud Régner, Audrey Lup, Charline Trèves (Corporate finance); Rothschild/Transaction R, Marguerite Mell, Florimond Desprez (M&A); Raphaël Financial Advisory, Florent Haïk (M&A); DLA Piper, Jeremy Scemama, Emilie Vuillin, Nicolas Lovas (Legal).
Acquirer – Grant Thornton, Nathalie Margraitte, Guillaume Schaiffer (Corporate finance); Crédit Suisse, Manuel Lasry, Michael Herrmann, Augustin Boyer (M&A); Ayache Salama, David Ayache, Laurent Asquin (Legal); Altana, Caroline André-Hesse, Jeanne Cordoliani (Environmental due diligence); Landwell, Sarah Dezes, Jean-Philippe Brillet (Tax).