US buyout firm Bain Capital has beaten off stiff competition to buy Brakes Bros, a UK frozen food supplier taken private by Clayton Dubilier & Rice and CCMP Capital five years ago.
Terms of the transaction have not been disclosed, but a banking source put the value of the deal at about £1.3 billion (€1.9 billion; $2.6 billion).
CD&R took Brake Bros private in August 2002, with CCMP Capital, formerly the buyout arm of JP Morgan, acting as a minority investor. CD&R, which contributed a £270 million equity cheque to the £627 million public-to-private deal, is set for a substantial return after seeing the group double in value during its period of ownership.
Bain fought off competition from almost every other large buyout firm to seal the transaction, with The Blackstone Group, BC Partners, CVC Capital Partners and Cinven all thought to have been short-listed. Kohlberg Kravis Roberts and TPG and were also reportedly interested, as was US trade buyer Sysco.
The US firm will have benefited from its close relationship with CD&R, with whom it teamed up this month to buy HD Supply, the former distribution arm of US retail giant Home Depot.
CD&R has developed a strong track record in buying and managing distribution businesses in various sectors. In addition to Brakes and HD Supply, it has also enjoyed successful investments in electrical groups Rexel and Wesco.
A source close to Brakes said the buyout firm’s major impact had been in integrating its regional operations, particularly its French business, and boosting margins by increasing operating efficiency and improving sourcing and pricing.
The company, whose core business is in frozen foods, has also benefited from increased spending on food, as its customers – which include catering firms and big pub chains – have moved upmarket to meet the needs of more health-conscious and quality-focused consumers. This has allowed Brakes to sell more high-margin premium products.
This is the third deal agreed by Bain this week, following the acquisitions of US-based Guitar Center and German yacht manufacturer Bavaria Yachtbrau.