Lion bags $615m potato chip exit

UK-based Lion Capital, currently raising Fund III, purchased Kettle Foods in a 2006 deal that valued the company at around $300m.

Lion Capital is selling Kettle Foods for $615 million in cash to fellow snack food maker Diamond Foods.

The consumer sector-focused private equity firm purchased Kettle Foods, best known for its Kettle Chips gourmet potato crisps, in September 2006 in a transaction that valued the business at between $280 million and $320 million.

Kettle Chips: Lion feeds returns

A spokeswoman declined to comment on the expected return from the investment, which was made from Lion’s first fund independent of former US parent, Hicks Muse Tate & Furst (now HM Capital). The fund closed on €820 million in August 2005.

Lion partner Lyndon Lea said in a statement that since the private equity firm’s purchase of the company, “we have dramatically increased Kettle’s strategic value through category-leading innovation and penetration gains in the US and UK snacking markets, leading to double-digit annualised growth in group revenues and 30 percent annualised growth in group profitability”.

For NASDAQ-listed Diamond, the deal will add roughly $250 million in revenues and double its EBITDA, according to the statement. Subject to closing conditions and regulatory approval, the transaction is expected to close before the end of Diamond’s fiscal year 2010.

London-headquartered Lion began raising its third fund, which has a €2 billion target, in October, according to market sources.