Goldman and THL seal $2.45bn exit

Goldman Sachs Capital Partners and Thomas H Lee will sell Michael Foods to consumer goods company Post. 

GS Capital Partners, the private equity arm of Goldman Sachs, and Thomas H Lee Partners will sell MFI Holding Corporation, the parent company of Michael Foods, for $2.45 billion, according to a statement.

Michael Foods brands include Simply Potatoes and Better n’ Eggs’ liquid eggs. The company’s new owner, Post Holdings, owns cereal brands including Honey Bunches of Oats and Raisin Bran. On the one year anniversary of the transaction closing date, Post will pay an additional $50 million to Goldman and THL to represent the estimate value of certain tax benefits that Michael Foods is expected to realise. The deal is expected to close in the second quarter of 2014.

Since 2008, Michael Foods’ adjusted earnings before interest, taxes, depreciation and amortisation has grown at a compound annual growth rate of 5.3 percent.

THL acquired Michael Foods in 2003 in a transaction valued at roughly $1.05 billion. The acquisition was funded using capital from THL’s Fund V, which closed on $6.1 billion in 2010. THL sold a majority stake in Michael Foods to Goldman in 2010 when the company was valued at about $1.7 billion. THL retained a 20 percent stake in the company.

Michael Foods is the oldest company in THL’s portfolio. Its recent consumer and healthcare investments include 1-800-Contacts and Phillips Pet Food & Supplies. THL also invests in the business and financial services and media and information services industries.

The firm’s most recent fund, Thomas H Lee Equity Partners VII, launched last year with a $3 billion target, according to Private Equity International’s Research and Analytics division.

GS Capital Partners raises funds and co-investments in direct investments and actively buys secondary interests. The group’s most recent fund of funds and co-investment vehicle raised $129.5 million in 2013. GS Capital Partners focuses on large companies across a range of industries and geographies.