Private equity firms Partners Group and Charlesbank are closing in on a near done deal to acquire Hearthside Food Solutions LCC for more $2.4 billion, including debt.
The deal reflects the U.S. food manufacturing outsourcing sector’s appeal to private equity firms. Major food and drink companies turn to contract manufacturers such as Hearthside to cut production costs and boost their profitability.
The consortium of both firms outbid other private equity firms in the auction for Hearthside and is negotiating final terms with the company’s existing owners, Vestar Capital Partners and Goldman Sachs Group Inc.’s private equity firm.
Partners Group and Charlesbank have agreed to pay the equivalent of about 11 times Hearthside’s 12-month earnings before interest, taxes, depreciation, and amortization, according to sources.
Should the negotiations be completed successfully, a deal could be announced as early as Monday, warning as well that there was always a possibility that talks fall apart at the last minute.
Hearthside Food, a contract manufacturer used by food and drink companies such as Kellogg Co and Pepsi Co Inc.
The company, based in Downers Grove, Illinois, was created in 2009 by private equity firm Wind Point Partners and Rich Scalise, a former Ralcorp Frozen Bakery Products president and veteran of ConAgra Foods Inc. Scalise now serves as Hearthside’s chairman and chief executive officer.
The food firm produces baked foods and snacks, including energy bars, cookies
Goldman Sachs and Vestar acquired Hearthside for $1.1 billion from Wind Point in 2014. Hearthside has since acquired other companies, including Standard Function Foods Group last year.
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