Griffin's sale tipped by end of year

Photo / Rotorua Daily Post

- The sale process for Griffin's Foods, which has half the biscuit market and is the biggest snacks manufacturer in New Zealand, heats up this month, with indicative bids due in just days before the Rugby World Cup finals.

The maker of Gingernuts, Mellow Puffs and Huntley & Palmers crackers and Eta brand snacks employs more than 800 people in New Zealand. It has a biscuit factory in Papakura and savoury and wrapped snacks factory in Wiri.

Vendor Australian-based Pacific Equity Partners bought the business from Danone Asia in 2006 when it had annual revenue of $176 million.

It is expected to have revenue of $302 million and earnings of $108 million this year, Dow Jones Newswires reported, citing a source that has seen an information memorandum for the sale.

A price in the range of seven to nine times this level of earnings may be possible, a source told BusinessDesk. The vendor is believed to be emphasising brand strength in the biscuit market and scope for expanding exports in the snack business.

Buyers are expected to visit the business this month before placing indicative bids around October 21. The Rugby World Cup, which has brought some wealthy investors to New Zealand, concludes on October 23.

Negotiations will then continue with a short list of buyers with a goal of concluding the transaction before the end of the year.

A spokeswoman for PEP said the company was conducting a review of the business and a sale was an option.

UBS and Goldman Sachs are advising PEP.

Potential buyers include global food companies like Kraft, Kelloggs and China's Bright Food Group, and also beverage companies like Coca Cola.

Japanese beverage company Kirin owns Lion Breweries in New Zealand and Asahi Group Holdings purchased New Zealand drinks company Independent Liquor this year.

Griffin's Foods, which began in Nelson in 1864, recently acquired the Nice & Natural Wrapped snacks business, making it the biggest snacks manufacturer in New Zealand, according to its website.

"Each year, we sell more than $300 million of products, making us one of New Zealand's largest branded food companies," the website says.

When PEP purchased Griffin's it said the company was the leader in the New Zealand biscuit market and was the second-biggest player in the savoury snack category.

PEP managing director, Rickard Gardell, has led his company's involvement in the Griffin's Food business.

New Zealand Companies Office records for the holding company, New Zealand Snack Foods Ltd., show the company had sales of $263.77 million in the year to December 31, 2010, up from $259 million in the previous year.

The gross profit after cost of goods sold was $149.47 million and the profit attributable to shareholders was $16.2 million, up from $13.1 million in 2009.

The company had intangible assets of $390 million. A note to the accounts showed the Griffins business had a brand and goodwill value of $311 million, of which $211 million was goodwill. Eta had a brand value of $23.7 million and Nice & Natural had a brand value of $54.19 million.

The company met all of its covenant requirements as at December 31, 2010.

The key management of Griffin's Foods earned short-term benefits totalling $3 million.