Deal in Focus: Ardian merges Spanish bakeries Berlys and Bellsolà

Ardian this week acquired a stake in Berlys from Alantra Private Equity and Artá Capital, while concurrently purchasing a majority stake in Bellsolà from Landon Group Corporativo. In the latter deal, the vendor will retain a minority holding in the business.

The acquirer drew down capital from its €4.5bn Ardian LBO Fund VI, which hit its hard-cap in May 2016 and is now 25% deployed, according to unquote" data. At completion of the transaction, the fund manager will merge the two companies, creating a new group that will have 11 production plants and expects to generate €300m in revenues. The consolidated group will have 1,700 employees across 30 countries.

The sellers were understood to have mandated PJT Partners to run the sale. According to local press reports, Berlys was valued within the €450-500m EV range, equating to an EBITDA multiple of around 10x. Other private equity houses were reportedly involved in the bidding process, including Cinven and PAI Partners.

A source close to the matter told unquote" that Alantra and Artá generated €283m of total capital gains during its tenure, representing a 3.3x cash return from the initial investment and 20% IRR. The GPs acquired the business for an EV of €300m in October 2010 in a transaction that saw Alantra's €550m Mercapital Spanish Buyout Fund III acquire a 55% stake in the company and Artá – whose €400m vehicle is advised by Mercapital – take a 35% stake.

Frozen food bonanza
Berlys and Bellsolà specialise in the production and distribution of bread, pastry products and savoury snacks. Both businesses are understood to have grown at a single-digit rate over the last two years, says another source close to the situation.

"It is a very resilient industry, which bases its growth on positive consumption trends overall and high entry barriers, given the high investment level required for manufacturing capacity and innovation," says the source. Furthermore, the source explains that technology is improving the frozen food industry and that the bread production space is growing across the Spanish market.

Following the merger, the sponsor aims to expand the group through the combination of the two companies' distribution channels and commercial networks. However, both businesses will continue to trade under their own brands and keep their existing product portfolios. Berlys chair Julio Muñoz will lead the combined business as chair, while Bellsolà general manager Bosco Fonts will become CEO.

Currently, Pamplona-based Berlys has seven production plants and two logistics centres. It distributes under the Bertina, Berlys and Korfest brands to traditional bakeries and retail chains across Spain and 20 other countries. In 2015, it generated €224m in revenues and employed 1,250 people. According to unquote" sister publication Mergermarket, it generated EBITDA of around €50m.

The Spanish food sector has seen three additional private equity investments in 2017 to date, totalling €620m of capital injected

Bellsolà is a smaller business. It has two production plants – one large plant in Girona and a smaller one in Madrid – and currently employs 400 people.

At completion of the merger, the sponsor will focus on further consolidation across Spain and Europe, says the source. In the short term, the merged group is expected to become one of the three largest players in the Spanish market, alongside MCH Private Equity-backed Europastry and privately owned Panamar Panaderos.

The European food sector as a whole has witnessed an uptick in private equity activity recently. In particular, Spain has already seen a buoyant 2017 in both value and volume terms, with a growth capital transaction and two buyouts totalling €620m of capital injected. Black Toro Capital provided ice-cream producer and restaurant manager Farga Group with a €40m equity and debt package in April. More recently, Cinven acquired a majority stake in berry supplier Planasa for €450m, while ADM Capital acquired a majority stake in olive oil producer Olivos Naturales for an estimated €130m EV.

Over the last four years, the Spanish market has seen a further nine mid-market deals with EVs north of €50m. Notable deals include CVC Capital Partners' purchase of a 48% stake in listed olive oil and condiment producer Deoleo, ProA Capital's acquisition of seedless grapes producer Sat Moyca for €185m and Carlyle's acquisition of a majority stake in food producer Grupo Palacios Alimentación. Other transactions include GED Capital and Oquendo Capital's investment in frozen octopus distributor Discefa and Miura Private Equity's acquisition of a 25% stake in citrus fruit producer Martinavarro.

The most active GP in the sector has been Portobello Capital, which has acquired three businesses within the sector in the last three years. Portobello's deals include spices and herbs business Ramón Sabater, frozen seafood company Ibérica de Congelados and ready meals producer Industrias Alimentarias de Navarra.

People
Ardian – Philippe Poletti (head of Ardian mid-cap buyouts); Gonzalo Fernández-Albiñana (managing director); Daniel Setton (director).
Berlys – Julio Muñoz (chair).
Bellsolà – Bosco Fonts (general manager).

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• Topics
• Buyouts
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• Deal in focus
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• Ardian (formerly Axa PE)
• Alantra Private Equity
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• Oquendo Capital