Business Irish

Friday 19 October 2018

Smooth sale in offing for Dairygold Co-op spin-off

Joe Brennan

Reox Holdings, the Dairygold Co-op spin-off, has attracted a handful of first-round offers for its consumer foods division, whose brands include Galtee, Dairygold, Calvita, Mitchellstown and Shaws. Bidding is believed to topped €160m.

Suitors lining up to acquire the business, called Breeo, are understood to include private equity firms Jaguar Capital, Ion Equity, CapVest and Lioncourt Capital. It is believed that either Kerry Group or Glanbia is also in there.

Ion Equity, the private equity and corporate finance firm led by Neil O'Leary, kick-started the process during the summer with an unsolicited bid for the business, which has annual sales of about €240m and employs 300 people.

Dublin-based Jaguar Capital, co-founded by accountants Liam Dowd and John Burke, has mainly been involved to date in property investments.

However, it recently signalled its intention to broaden its scope by poaching Kieran Carolan, the managing director of Green Isle Foods, the frozen pizza maker based in Naas, Co Kildare.

Mr Carolan, who is taking up a senior management position at Jaguar, is not expected to leave Green Isle, a unit of London-listed Northern Foods, until next month.

UK-based CapVest, was co-founded in 1999 by Seamus Fitzpatrick and American associate Randl Shure, is also believed to be keen to get hold of the business.

CapVest has a strong foothold in the European food sector through its ownership of Britain's largest seafood company Young's Bluecrest and the Findus frozen foods brand in Scandinavia and France.

It sold Vaasan & Vaasan, the largest bakery business in Finland and the Baltic region, last June in a €400m-plus deal.

CapVest, which raised €50m from high-net-worth clients of NCB Stockbrokers earlier this year for its most recent fund, made its first investment in Ireland earlier this year by taking a controlling stake in the Mater Private in a deal which valued the group at about €350m.

Lioncourt, controlled by financiers David Andrews and Michael Tunney, owns 36pc of Jacob Fruitfied Food Group, whose brands range from Fig Roll biscuits to Chef sauces.

Second-round bids for Breeo are due later this month and Merrion Capital is handling the sale.

Reox, which was spun out from Dairygold as a separate company in May of last year, owns the co-op's former consumer foods, DIY retailing and property divisions.

It continues to be 25pc owned by the co-op, with the remaining 75pc distributed to its 7,500 members.

Reox was the main beneficiary from Ion Equity's €110m purchase late last year of SWS, the Bandon-based energy, waste and outsourcing group.

It owned 44pc of the business, with the remainder held by four west-Cork co-ops.

An information memorandum on Breeo, which was forwarded to interested parties last month, showed the company was forecasting earnings before interest, depreciation and amortisation of €15m this year.

The company is forecast to increase EBITDA by about 13pc next year to almost €17m as the benefits of outsourcing offset flat sales growth, according to sources who have seen the circulated document.

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