Lion Capital Agrees To Buy Picard Surgeles

LONDON (Reuters) – BC Partners agreed to sell French frozen-food firm Picard Surgeles to rival Lion Capital, highlighting the keen appetite of private equity firms to strike deals in the recession-resilient food industry.

The sale of Picard, which has thrived by persuading France’s fastidious consumers that convenience food can be high-quality, is the country’s biggest leveraged buyout (LBO) since the September 2008 collapse of Lehman Brothers.

Lyndon Lea, a partner who led the purchase for Lion, said the firm was keen to acquire a business with “resilience and stability” that was a household name in France. Lion will seek to grow the business by opening perhaps 200 to 300 more stores in France and by investing to improve areas such as merchandising and the supply chain, Lea said.

In a joint statement on Monday, which contained no financial details, the firms said Lion would begin talks with employee representatives this week ahead of a formal agreement and the transaction was likely to complete in the fourth quarter.

Three people familiar with the matter said the deal placed an enterprise value of about 1.5 billion euros ($1.9 billion) on Picard. BC would make roughly double its initial equity investment, one of the people said.

Two of the people said Lion made a pre-emptive bid over the weekend to head off rivals Bain Capital, CVC [CVC.UL], and LBO France, who were also preparing binding bids for the company. The other private equity firms either declined to comment or had no immediate comment.

Clive Black, head of research at brokerage Shore Capital, said buyout funds prized the relatively dependable cashflows of companies selling consumer staples such as food, drink, cigarettes and household products.

“The attractiveness of consumer staples has become more apparent recently, given the collapse of growth sectors like commercial property that find capital hard to get hold of,” Black said.


Buyout firms are lining up several other food deals. Blackstone and PAI Partners are considering selling United Biscuits for at least 2 billion pounds and PAI says it is open to offers for its half stake in Yoplait, the yoghurt maker. [ID:nLDE66K18C] [ID:nLDE66K0FP]

Lion, a specialist investor in consumer industry companies such as lingerie firm La Senza and cereal-maker Weetabix, would become the third successive private equity firm to own Picard.

The offer comes a week after it lost out in the race to acquire Unilever Plc/NV’s (ULVR.L) (UNc.AS) Italian frozen-foods unit, Findus Italy. Instead, Birds Eye Iglo, a unit of rival buyout house Permira [PERM.UL], bought Findus Italy for 805 million euros. 

Picard runs more than 800 stores in France and generated 1.15 billion euros in revenue last year. Earlier this month, bankers told Thomson Reuters Loan Pricing Corp (TRLPC) that Picard has earnings before interest, tax, depreciation and amortisation (EBITDA) of about 160 million euros.


France, with its prized reputation for fine cuisine and vibrant street markets selling fresh fish, meat, fruit and vegetables, may not seem an obvious place to sell frozen food.

Television shows decry the use of frozen ingredients in restaurants and France has often looked down on countries such as Britain where convenience food is commonplace.

But Picard stores are found throughout Paris and are even sometimes highlighted by estate agents among a property’s local amenities.

Unlike rivals, Picard offers high-end meals and ingredients, rather than focusing on low prices. Its products include rooster in a cream sauce with truffles and wine from the Jura region for 23.95 euros, a box of 20 petits fours, savoury pre-dinner snacks, for 7.70 euros and a dozen macaroons for 4.95 euros.

The business has been owned by private equity for nearly a decade. Candover (CDI.L) led a 2001 buyout from majority owner Carrefour SA (CARR.PA), and three years later BC took over in a deal that valued Picard at 1.3 billion euros.

The sale is a boon for BC, which sources familiar with the matter said in May was seeking to raise a new 5.9 billion euro fund, one of the year’s most eagerly awaited.

Rothschild [ROT.UL] and lawyers from Cleary Gottlieb Steen & Hamilton advised BC. Citigroup and SJ Berwin advised Lion. Credit Suisse, Citi and Morgan Stanley provided financing.

The deal is backed by senior leveraged loans, some of which will be repaid by high-yield bonds later in the year, a person familiar with the matter told Thomson Reuters LPC.

It is France’s largest LBO since the June 2008 buyout of Converteam Group SAS, a power conversion company, by LBO France, Thomson Reuters data shows. (Additional reporting by Zaida Espana in London with James Regan and Julien Ponthus in Paris; Editing by Steve Slater and David Holmes) ($1=.7746 euros)