Pacific Equity Partners buys Allied Mills for $144m

The Sydney-based firm has made the investment from its fifth Australia and New Zealand-focused buyout fund, which closed on $1.5bn in 2015.

Australian private equity firm Pacific Equity Partners (PEP) has acquired all of the shares of bakery goods manufacturer Allied Mills Australia for A$190 million ($144 million; €134 million), according to a company statement.

Under the transaction, which is subject to regulatory approval, PEP will acquire Sydney-headquartered agri-business GrainCorp’s 60 percent stake as well as Cargill’s 40 percent shareholding in the company. 

PEP said in a statement Allied Mills will be integrated with Pinnacle Bakery and Integrated Ingredients, a company it bought in June 2015 from the Kerry Group of Ireland.

According to GrainCorp, the price for its 60 percent stake in Allied Mills equates to an enterprise value of A$455 million. And as part of the sale, A$35 million of franking credits, which eliminates double taxation of dividends, will also be distributed to GrainCorp.

Allied Mills is one of Australia’s largest manufacturers and distributor of bakery premixes, flour and semi-finished products.

Commenting on the deal, Mark Palmquist, managing director and chief executive officer for GrainCorp, said: “This transaction is consistent with our strategy to proactively manage our portfolio to improve returns. The interest shown by PEP to acquire full control of Allied Mills provided us with an excellent opportunity to realise the value in Allied and create balance sheet flexibility for the future.”

Tony Duthie, PEP managing director, said in a statement: “This is a rare combination of complementary businesses operating in truly adjacent categories. PEP has a proven track record of investing in consumer product businesses and we intend to invest significantly to grow and support the integrated business.” 

Sydney-based PEP is in the process of deploying its fifth buyout vehicle, A$2.1 billion Pacific Equity Partners V. 

The firm’s investment in Allied Mills is its fifth from Fund V. In June last year, PEP acquired ASX-listed food manufacturing company Patties Foods for A$232 million. The firm also invested in honey company Manuka Health, food manufacturing company Pinnacle Foods, and Auckland-based private education company Academic Colleges Group.