Roark sells Atkins to blank-check company after 6-year hold

Roark Capital Group looks as if it will nearly triple its money with the sale of Atkins Nutritionals to a blank-check company affiliated with Centerview Capital.

Conyers Park Acquisition Corp said April 11 it is merging with Atkins to form Simply Good Foods Co, which will list on the Nasdaq. Roark Capital Group, the seller, will receive $730.1 million, which includes 10,250,000 Simply Good common shares. The deal is expected to close in June.

The Conyers-Atkins merger has an enterprise value of about $856 million, the statement said. The deal includes a $100 million private placement from investors including Fidelity Management and Research Co, Capital Research and Management Co and T. Rowe Price Associates Inc.

Denver-based Atkins makes and sells a variety of diet nutrition bars, shakes and frozen meals. For 2017, the company is expected to produce $72 million of EBITDA, up 13 percent from $64 million in 2016, as sales reach $402 million, up 5.8 percent from $380 million, according to investor presentation documents. The $856 million sale values Atkins at 11.6x pro-forma EBITDA, executives on a call said.

Conyers Park went public in July 2016, raising $402.5 million. All the funds raised by the IPO are going to buy Atkins. The blank-check company is an affiliate of Centerview Capital, which invests in consumer middle-market companies, a statement said. (Centerview Capital is the PE arm of Centerview Partners, the investment bank.).

Whether Centerview owns any part of Conyers is unclear. Centerview Capital partners James Kilts, David West and Brian Ratzan are on Conyers’s board. Kilts is executive chairman of Conyers, while West is CEO and Ratzan is CFO, an SEC filing said.

For Roark, the sale represents an exit of a more than six-year investment. The Atlanta PE firm, which owns Arby’s and Cinnabon, acquired Atkins in 2010 for $301 million. The investment in Atkins came from Roark’s second PE fund, which closed at $1 billion in 2008, Buyouts has reported.

Roark has already received some of its money back. In 2013, Atkins paid a $118 million dividend to its shareholders, including Roark, Buyouts said.

In March 2015, Roark hired Centerview Partners and Deutsche Bank to run a process for the company. In July 2015 Atkins changed plans, opting to pursue an IPO after the auction didn’t meet price expectations, Reuters reported. It’s unclear whether Atkins ever filed with the SEC for the IPO. With the sale to Conyers, it appears that Roark stands to make 2.8x its money. (This assumes the PE received all the $118 million dividend and the $730 million from the sale to Conyers.)

The transaction also represents the fourth time Atkins has changed hands since Dr. Robert Atkins, who pioneered the Atkins diet, died in 2003. That year, Parthenon Capital, along with Goldman Sachs Capital Partners, acquired a majority of Atkins. In 2005, Atkins, struggling with $300 million in debt, filed for bankruptcy.

North Castle, in 2007, bought Atkins for about $100 million, the Wall Street Journal said.

Roark declined comment.

Action Item: To contact Conyers CFO Ratzan call +1 212-429-2211

Photo of a raspberry chia bar courtesy of Atkins