Montagu Private Equity has sold health food company Marlow Foods to trade buyer Premier Foods for a cash price of £172 million ($315 million; €256 million). This represents a 4.5 multiple of equity invested, according to sources close to the deal.
Marlow Foods is a Yorkshire-based company employing 360 staff. Its largest brand is Quorn, a fungi-based meat substitute that has annual sales of £95 million in the UK.
Montagu acquired the company in May 2003 for a price of £70 million including debt. Anthony Greensmith, an investment director in the firm’s Manchester office, said in an interview with PEO: “Most of the gain since then has come from earnings growth. Quorn is a very good choice for healthy eating as it’s low in salt and fat, so our strategy was about getting the brand message right and establishing that it isn’t just an alternative to meat.”
Premier Food intends to accelerate Quorn’s sales growth, currently at 7 percent, by further increasing spending on marketing, according to reports.
Premier is itself the product of a private equity investment, having been built through acquisitions by London-based food specialist Lion Capital, the private equity firm formerly known as Hicks Muse Europe. Under Lion’s stewardship, previous Premier acquisitions have included Typhoo Tea, Cadbury’s Hot Chocolate and Bird’s Custard.
Premier floated on the London Stock Exchange last July. Lion sold its remaining 20 percent stake last October.