PAI to exit KP Snacks

The French firm’s partial exit from United Biscuits, which it owned jointly with Blackstone, should help its efforts to raise a €3bn fund

United Biscuits, an international snacks producer co-owned by PAI Partners and The Blackstone Group, has agreed to sell KP Snacks to Düsseldorf-based food group Intersnack for around £500 million, according to a source close to the deal. 

The price equates to a 9x multiple to the company’s earnings before interest, tax, depreciation and amortisation, the source said. The proceeds will be entirely used to pay down debt.

KP Snacks is the second biggest snacks producer in the UK; it owns popular brands such as McCoy’s, Hula Hoops, Skips and KP Nuts. PAI and Blackstone have invested into the business by developing the range, increasing the health awareness of its products, bringing costs down and growing the company’s presence internationally, the source said.

KP Snacks had been split from the rest of United Biscuits in the last 12 months so as to attract the interest of trade buyers – the hope being that selling the constituent parts of UB would yield a higher price than selling the group as a whole. PAI took a similar approach with UK car repair chain Kwik Fit: the firm generated a reported £291 million profit by selling the company’s insurance and tyre business arms separately.

The partial sale is the latest of a string of exits by PAI, which recently started raising its sixth buyout fund. PAI sold its remaining stake in biosciences firm Chr. Hansen in January, after successfully exiting from Kwik Fit, Spie, Grupo Coin and Yoplait last year. All told, this has allowed the French firm to return a total of €4.6 billion to its investors over the past two years.

The two buyout firms will retain a controlling stake in United Biscuits. Some commentators have suggested that the KP deal represents a stepping stone towards a full exit, but the source said that PAI has no immediate plans to sell its remaining stake. United Biscuits was an acquisition from the firm’s Fund IV. PAI declined to comment on the performance of the fund.

Blackstone could not be reached for comment.

Elsewhere, PAI said today that it had completed the acquisition of a majority stake in Marcolin, an Italian eyewear manufacturer. PAI intends to invest in Marcolin’s international development, as well as contracts with designer brands, the firm said in a press release. Cristallo, the acquisition vehicule used by PAI to complete the transaction, will launch a mandatory public tender offer for the remaining share capital of Marcolin, which is publicly traded.

PAI is enjoying a rebound after a tumultuous period in 2009 that saw the departure of chief executive Dominique Mégret and chairman Bertrand Meunier after a disagreement with the firm’s other partners. Its Fund V, which had an original hard cap of €5.40 billion, was reduced to roughly half its size in the aftermath of Mégret’s departure. PAI’s new Fund VI has a target of €3 billion.