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August 25, 2008

Lion Capital Hauls in Europe's Biggest Seafood Operation from CapVest

Six months after the private equity fund CapVest announced the organizational merger of their frozen and chilled food (largely seafood) operations - Findus, Young's, and the Seafood Company, operating as FoodVest - FoodVest was picked up by the UK -based buyout fund Lion Capital.

The sale, reported on July 22 as being for GBP 1.1 billion (including debt), is the largest single buyout in the UK for 2008. According to Thomson/Reuters, global private equity buyouts in second quarter 2008 were down over 80% from the same period last year. Details of the buyout financing were not disclosed.

Lion Capital's acquisition of the largest European frozen seafood operation makes it the market leader in the sector, with 2007 sales of over GBP 1 billion (USD 1.85 billion) - beating out Bird's Eye/Igloo, Unilever's former frozen food division sold to buyout fund Permira in 2006 for EUR 1.9 billion (USD 3 billion). FoodVest employs more than 6,000 people at 20 sites in 7 countries.

Young's supplies 40% of all seafood consumed in the UK and has a leading position in the UK fresh, frozen and chilled seafood markets. Findus remains (formerly Nestlé's frozen foods brand) the market leader in Scandinavia. The Seafood Company is Europe’s biggest farmed salmon processor, and sells private label seafood products in the UK. Both UK companies have been through extensive bouts of restructuring and closures under a succession of owners, including various private equity funds (see January 28 article "PE Owners Combine Findus, Young's to Create European Seafood Giant" on this site). Findus was pumped for cash through 6 years of asset stripping under Swedish private equity fund EQT before being sold to CapVest in 2006. CapVest claims a 6-fold increase in profits since it began constructing FoodVest with the 2002 acquisition of Young's Bluecrest.

Lion Capital is emerging as the European buyout fund with the most extensive portfolio of branded food companies. In May 2007 Lion took a majority stake in the Russian Alcohol Group, the country's largest producer of vodka and ready-to-drink (RTD) alcoholic beverages. Russian Alcohol's Green Mark vodka is the largest brand by volume in Russia and one of the top 5 global brands. In May 2007, it also bought for an estimated EUR 400-500 million Finland's Vaasan & Vaasan, the leading producer of fresh bread, bake-off, crispbread and other bakery products in Finland and the Baltic States. The Vaasan & Vaasan Group includes Vaasan & Vaasan Oy in Finland, Swedish subsidiary Nordic Bake Off AB, and the Baltic subsidiaries AS Leibur, A/S Hanzas Maiznicas and UAB Vilniaus Duona. In April 2008 Vaasan &Vaasan bought Norwegian bake-off company Culinor SA, further strengthening its position in the Nordic market.

Like Findus, Vaasan & Vaasan had previously been an EQT portfolio company. Under EQT, Vaasan & Vaasan was also weakened through recapitalization and saw employment decline while eventually growing sales through acquisitions. EQT does not disclose details of it's operations, but an internal company presentation describes a 370% return on investment over 6 years. An EQT partner commented at the time of the sale that "It has been a very good investment for EQT…We have made several times our money."

Five days before clinching the FoodVest deal, Lion bought the Netherlands-based Advang Holding BV from Dutch buyout house Egeria Capital BV. Advang Holding includes Unilever's former frozen snack division Mora, spun off in 2005.

In August 2007 Lion Capital bought the Russian juice drinks company Nidan Soki for over USD 500 million, the largest Russian LBO to date.

Lion bought out the UK-based cereal maker Weetabix for GBP 640 million in November 2003, picked up (together with Blackstone) Orangina, the former European beverages division of Cadbury Schweppes, in February, and in August of that year bought Kettle Foods, the market leader in both the US and the UK for organic potato chips.

In 2007, Lion hired professional union busters - the notorious "Omega Division" of the US-based Burke Group - to prevent the T&G section of Unite from organizing 340 workers at Kettle Foods' Norwich facility.