Princes Group sale restart scheduled for September

Christel Thunell and Min Ho
02 August 2023

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The sale process for UK-headquartered food and drink manufacturer Princes Group is expected to restart in September, according to three sources familiar with the situation.

The process was put on hold in April by owner Mitsubishi Corporation and its advisor Houlihan Lokey, as reported by this news service. First round offers did not match the price expectations of the vendor, which decided to pause the sale and recommence in 3Q23 in the hope that Princes' earnings would increase and push the price tag up, as reported.

The sell side is waiting for financial numbers to come through to support the desired valuation and will then pick up the process where it left off, two of the sources said. This is planned for September, all three sources said.

Bidders still in the running have been given the opportunity to visit some of Princes' sites over the summer, according to one of the sources and a sector banker following the process.

Apollo Global Management, Aurelius Group, CapVest, Epiris, One Rock Capital Partners, Lone Star Funds and Bain Capital-backed Valeo Foods were among the first-round bidders around the asset, according to a previous report. However, Apollo is not involved, as the asset is too small for the private equity giant, according to a fourth source familiar with the situation.

Princes Group was marketed off GBP 80m EBITDA, with bidders anticipating an enterprise value equal to 7x-8x EBITDA, as reported. Some parties bid 6x-7x EBITDA, while the sell side expectation was a double-digit multiple, according to a second sector banker following the situation.

One of the sources, and three sector bankers, tracking the situation expressed doubts about Mitsubishi achieving the desired valuation for Princes.

Another six months of figures may not be enough to improve the valuation, the three bankers said. Margins for food production businesses are expected to recover during 2023 due to stabilising raw material prices, and it would make more sense to wait until 2024 to restart the process, two of the bankers said.

Still, Mitsubishi may only reach a valuation of 8x next year if financials improve and the debt financing market recovers, one of the bankers speculated.

Mitsubishi, Houlihan Lokey, Apollo, Aurelius, CapVest, Epiris, and Valeo declined to comment. Princes Group, One Rock, and Lone Star did not respond to requests for comment.