French multinational food company Bonduelle acquired Irwindale prepackaged salad maker Ready Pac Foods Inc. last week for $409 million.
Bayside Capital, a distressed-asset arm of Miami-based private equity shop H.I.G. Capital, was the seller along with minority stakeholder Dennis Gertmenian, who founded Ready Pac in 1969.
The sale – which valued the company at 11-times earnings before interest, tax, depreciation, and amortization – represents a huge turnaround for Ready Pac.
Spokesman Alan Hilowitz said the company came back from the verge of bankruptcy nine years ago when H.I.G. entered the picture.
“When they took (Ready Pac) on it was definitely in the distressed-asset category and remained there until about three years ago,” Hilowitz said.
Other food and beverage companies in H.I.G.’s portfolio include ice maker Arctic Glacier Holdings Inc. and frozen-meat producer Albertville Quality Foods.
Ready Pac’s sales have since skyrocketed under Chief Executive Tony Sarsam, a Frito-Lay Inc. and Nestle USA veteran, who took over Ready Pac’s operations in October 2013. The company reported revenue of $677 million in 2015, which ballooned to $800 million last year. Ready Pac now provides product to Monrovia-based specialty grocer Trader Joe’s, megastores such as Kmart Corp. and Wal-Mart Stores Inc. as well as traditional grocery outlets including Safeway Inc. and Albertsons Cos Inc.
The company’s year-over-year numbers gave it and H.I.G. the confidence to start shopping around for a buyer, according to Hilowitz. Four suitors emerged in the fall, among them Bonduelle, another company in the food space, and two private equity outfits.
He declined to disclose who the other suitors were, but said Bonduelle quickly established itself as a front-runner.
“When Tony and the team first met with the Bonduelle folks, they kind of just knew,” he said. “It wasn’t immediately a done deal, but it’s a bit like dating: Sometimes it just feels right.”
That feeling was bolstered by the companies’ symbiotic business strategies and market share, Hilowitz added. Bonduelle’s North American presence was very thin with only a small line of canned and frozen products available, which meant it wasn’t competing with Ready Pac’s products and would be invested in growing the brand in its core market.
“It was very important for whatever company that came in to understand the vision of the company and that they wanted to grow the Ready Pac brand,” Hilowitz said. “(Bonduelle) understood and matched up completely with what we’re trying to do.”
The deal, consummated last week, gives Bonduelle 100 percent of Ready Pac’s common stock, and the French company said it would operate the new acquisition as a wholly owned subsidiary. Ready Pac, which will be the fifth and largest Bonduelle business unit, has four production facilities and 3,500 employees in the United States.
Hilowitz said Sarsam and the entire executive team would be staying on and that the company expected to grow its operations team – though logistics are being worked out.
“There have been some conversations about the organizational structure,” he said. “Anything’s on the table. We don’t exactly know which way it will go yet.”
Crédit Agricole and Willkie Farr & Gallagher acted as financial and legal advisers to Bonduelle. Harris Williams & Co. and Skadden Arps Slate Meagher & Flom served as financial and legal advisers to Ready Pac.
