Sun Capital takes a 13x bite out of Bruegger’s

Sun Capital Partners has sold Bruegger’s Enterprises, which it acquired in May 2003. Under Sun’s ownership, the company increased sales by 76% and more than doubled EBITDA.

Turnaround specialist Sun Capital Partners has sold its stake in Bruegger’s Enterprises to France-based Groupe Le Duff, generating a 13x return multiple and 35 percent IRR, according to a person with knowledge of the situation.

Sun purchased Bruegger’s in May 2003, investing primarily from its third fund that closed on $500 million in January 2003 and its second fund that closed on $200 million in May 2001. Since acquiring the company, sales at Bruegger’s increased by 76 percent, while EBITDA more than doubled, according to a company statement.

Founded in 1983, Bruegger’s became the second largest chain of bakery-cafes across the US and Canada under Sun’s ownership. The company, which specialises in baked goods including bagels and sandwiches, was acquired at a time when both sales and profitability were declining.

Bruegger’s expanded its business into Canada as the capital markets slowly recovered in November 2009, with the acquisition of Timothy’s restaurant business, adding new distribution channels for Bruegger’s “New York-style” bagels. Today, the company has locations in 26 US states, the District of Columbia and several Canadian provinces. Bruegger’s management team will continue to be led by chief executive officer Jim Greco.

Piper Jaffray and North Point Advisors acted as financial advisors to Sun Capital.

Sun Capital had its second most active deal year in 2010, co-chief executive officer Rodger Krouse said at a media event in January. The firm completed more than 25 deals during the year, split roughly evenly between platform transactions and add-on acquisitions.

Sun has acquired a number of businesses in the restaurant industry, including Captain D’s Seafood Kitchen, the second largest casual seafood chain in the United States, which it purchased in 2010. The firm also has current investments in restaurant chains Boston Market and Friendly’s Ice Cream.