Lion Capital chips in for Kettle Foods

Lion Capital, the former European arm of HM Capital Partners, has paid between $280m and $320m for Kettle Foods, a maker of snacks and ‘healthy’ food brands in the US and UK.

Lion Capital, a UK private equity firm focused on the consumer sector, has acquired Kettle Foods, a US maker of crisps and snacks, in a deal that values the business at between $280 million to $320 million (€218 to €248 million).
Citigroup provided debt for the transaction. Kettle Foods was advised by Rothschild.

Kettle chips: Lion Capital reportedly plans to merge Kettle with United Biscuits’ KP Snacks

Lion Capital is investing from its debut fund, Lion Capital Fund I, which closed on €820 million last June. Kelly Mayer, a director at Lion Capital, said that the fund is now 80 percent invested.

Mayer said that Lion Capital had been invited to the auction by Rothchild due to its “background and reputation for investing in consumer businesses”. He added that Lion Capital was the only financial investor involved in the bidding.

Established in 1978, Kettle Foods makes Kettle crisps in the UK and US, as well as nuts, nut butters and tortilla products specifically for the US market. Headquartered in Oregon, US, with a manufacturing site in Norwich, UK, the company has forecast sales of approximately $150 million in the fiscal year 2006.
According to the Financial Times, Lion Capital has joined forces with Premier Foods, a UK food group, and NPM Capital, a Dutch private equity firm, to bid for the biscuits and snacks unit of United Biscuits. If successful, Lion Capital would acquire the KP Snacks business of United Biscuits, with the aim of merging it with Kettle Foods.
The Financial Times added that the Lion Capital consortium may face competition from rival private equity firms The Blackstone Group and Permira.
Kraft Foods, a US food group, originally partnered with Premier Foods and NPM Capital to buy the whole of United Biscuits but the deal broke down when the parties failed to agree terms. In early July, Kraft paid £575 million for the southern European business of United Biscuits, based in Spain and Portugal.
Lyndon Lea, founding partner of Lion Capital, said of the Kettle Foods deal in a statement: “Kettle Foods has built a beloved consumer brand with significant loyalty and opportunity for growth. As a leader in the premium and natural segments of the snacks market, Kettle is capitalising on consumers’ trend towards ‘healthier’ eating through product innovation and increased market penetration.”
Lion Capital’s other investments in the food sector include Materne, a French jam maker; Weetabix, a UK cereals group acquired in a £642 million buyout in 2003 when Lion Capital was known as Hicks Muse (Europe); and the European soft drinks division of Cadbury Schweppes, which Lion Capital acquired alongside Blackstone in November 2005 for €1.85 billion.