Archives for August 29, 2023

Roark Capital Acquires Subway

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Subway, one of the world’s largest quick service restaurant brands, has agreed to be acquired by Roark Capital at an enterprise value of $9.6 billion.

Subway serves made-to-order sandwiches, wraps, salads and bowls to millions of customers across more than 100 countries in nearly 37,000 franchised restaurants every day. Subway has the highest concentration of locations in North America with 20,603 in the United States, 2,881 in Canada, and 758 in Mexico.

Source: Getty Images

Outside of North America, the countries with the most locations are Australia with 1,215, Brazil with 1,643, and the United Kingdom with 2,195. The company reached a peak of 27,129 United States locations in 2016. The sale to Roark follows Subway announcing its 10th consecutive quarter of positive same store sales.

Subway was founded by Fred DeLuca and financed by Peter Buck in 1965 as Pete’s Super Submarines. The Milford, Connecticut-headquartered company adopted the Subway name in 1972. Subway struggled following the death of Mr. DeLuca in 2015 and a sale of the company was inevitable with the death in 2021 of Mr. Buck. However, the sale to Roark follows Subway announcing its 10th consecutive quarter of positive same store sales.

“This transaction reflects Subway’s long-term growth potential, and the substantial value of our brand and our franchisees around the world,” said John Chidsey, CEO of Subway. “Subway has a bright future with Roark, and we are committed to continuing to focus on a win-win-win approach for our franchisees, our guests and our employees.”

Roark Capital Group invests in companies that have revenues from $20 million to $5 billion and EBITDA from $10 million to $500 million. Sectors of interest include franchised and multi-unit business models in the retail, restaurant, and service sectors; consumer products; consumer and business services. The Atlanta-headquartered firm has more than $37 billion in assets under management.

J.P. Morgan is the financial advisor to Subway on this transaction.

© 2023 Private Equity Professional | August 30, 2023

J.H. Whitney Sells Alphia to PAI

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PAI Partners has agreed to acquire Alphia, one of the largest pet food co-manufacturers in North America, from J.H. Whitney Capital Partners.

Alphia is a manufacturer of more than one billion pounds of dry pet food and treats annually and also provides research and development, warehousing, transportation, and distribution services. According to sources familiar with the transaction, the sale of Alphia, which had FY2022 revenues of $875 million, is at an enterprise value of $1 billion.

Source: Alphia

J.H. Whitney acquired Alphia’s predecessor, C.J. Foods, in 2014. The company’s name was changed to Alphia in June 2020 when C.J. Foods acquired family-owned pet food maker American Nutrition.

Today, Denver-based Alphia has 800 employees, operates 6 manufacturing facilities across the US, and is the parent company of LANI, a provider of ingredient milling services (acquired in 2018), and Veracity, a warehousing and logistics services provider (acquired through the merger with American Nutrition).

“We have had a great partnership with the Alphia management team,” said Bob Williams, a senior managing director at J.H. Whitney. “Through deep investment in people, systems and facilities, with a constant focus on customers, Alphia has developed into a leading and pre-eminent co-manufacturer in the pet food industry. We are proud of the team and look forward to seeing Alphia continue its successful growth with PAI.”

“We appreciate the many years of support and partnership with J.H. Whitney, during which time we created Alphia, one of the leading pet food co-manufacturing platforms in the world,” said David McLain, the CEO of Alphia. “PAI is committed to our ongoing vision for growth and shares the common values of innovation, food safety and industry leadership.”

“Alphia is a best-in-class company and plays an invaluable role in the value chain of pet food and treats, an exciting consumer category with strong secular tailwinds,” said Winston Song, a partner at PAI and the firm’s consumer lead in the United States. “Pet parents continue to seek out innovation, quality and value – Alphia has set the industry standard as the trusted partner to many leading brands and retailers. We look forward to partnering with David McLain and his mission-driven team as we continue to invest behind Alphia to grow and scale the platform.”

“We are excited to announce our investment in Alphia, which represents our second platform in the U.S. We are committed to building the PAI franchise in the U.S. and look forward to our continued growth and success in this market,” said Maud Brown, a partner at PAI and the head of PAI’s United States team. PAI’s first major acquisition in the United States was the buy of Tropicana from PepsiCo in 2021.

Paris-headquartered PAI Partners invests in business services, food, consumer, general industrials, and healthcare companies based in the United States and Europe. PAI was founded in 1994 but its origins date back to Paribas Affaires Industrielles, a private equity operating unit of Paris-headquartered BNP Paribas which was founded in 1872.

J.H. Whitney invests in small and middle-market companies that are active in the consumer, healthcare, and specialty manufacturing. The firm was founded in 1946 and is based in New Canaan, Connecticut.

Goldman Sachs was the financial adviser to Alphia on this transaction.

© 2023 Private Equity Professional | August 30, 2023

Middleton Grows O2C with Green Sprouts Buy

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O2C Brands, a portfolio company of Middleton Partners, has acquired Green Sprouts, a seller of baby products.

Green Sprouts’ products – used by newborns, infants, and toddlers – include swimwear and swim diapers; sun protection hats, shirts, and shorts; blankets and towels; dishes, utensils, bottles and cups; bibs and burp cloths; toys and books; and oral, hair and nail care. The company was founded in 1982 by President Becky Cannon and is based in Asheville, North Carolina.

Source: Green Sprouts

“After 41 years of growing goodness with Green Sprouts, I am pleased to hand over my ‘baby’ to O2C Brands to nurture it through its next stage of development,” said Ms. Cannon. “O2C Brands is the best steward to lead Green Sprouts in further optimizing its potential.”

O2C Brands is designer and manufacturer of consumer products that are used in hydration, specialty beverage, portable cooling and humidifiers, food storage, pool, patio and beach applications.

O2C’s brands include O2COOL, portable cooling, hydration, and pool/patio/beach products; TREVA, fans and humidifiers; LunchBots, school lunch containers; Bobble, filtered water bottles and on-the-go coffee vessels; U-Konserve, reusable food containers; and EcoVessel, stainless steel water bottles and mugs.

The company’s products are sold through a range of channels including e-commerce, national chains, mass merchants, specialty stores, sporting goods, home centers, grocery chains, drug stores, and healthcare wholesalers.

“Green Sprouts exemplifies the very essence of O2C Brands core values – a fusion of innovation, sustainable materials, unwavering quality, distinctive design, and an emphasis on family. We are focused on strengthening Green Sprouts dedicated and loyal customer base, while building awareness through multiple market channels,” said Eric Lockwood, the CEO of O2C Brands.

Source: Green Sprouts

Green Sprouts was advised by Big Path Capital on this transaction. “We believe strongly in the growth potential for Green Spouts under O2C Brands’ direction,” said Michael Whelchel, the CEO of Big Path Capital.

Middleton Partners invests in private equity, real estate and venture capital. Within private equity, the firm invests in US-based middle market companies that have from $1 million to $20 million in EBITDA and are active across a wide range of sectors. Middleton is headquartered just north of Chicago in Northbrook, Illinois.

© 2023 Private Equity Professional | August 30, 2023

Southfield Hires Transformation Partner

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Southfield Capital has added Robert Root, an executive with more than twenty-five years of international operational and finance experience, to its investment team as a transformation partner.

In his new role, Mr. Root will lead the firm’s value creation efforts by executing strategic initiatives to build portfolio company performance and growth.

Prior to joining Southfield, Mr. Root was the head of global transformation at Seattle-based and privately-owned Trident Seafoods, one of the largest seafood companies in the United States. Earlier, he held various senior finance roles at Microsoft, and he spent over a decade at Procter & Gamble in several finance leadership positions.

“I’m excited to be part of Southfield and its unwavering commitment to transforming businesses,” said Mr. Root. “Together, we will continue to drive impactful growth and innovation across the portfolio.”

Currently, Mr. Root serves on the board of directors of Protos Security, a Virginia-based provider of security guards and administrative services that was acquired by Southfield in March 2019.

“We are delighted to welcome Bob to the Southfield team as a transformation partner,” said Andy Levison, the managing partner at Southfield. “His experience implementing strategic change and operational innovation will be instrumental as we continue to elevate our portfolio companies to new heights of success.”

Southfield Capital makes control investments in companies that are active in the outsourced business services sector and have EBITDA of $4 million to $15 million. In April 2021, the firm held an oversubscribed and above hard cap final close of Southfield Capital III LP with $303 million in capital. Southfield Capital was founded in 2005 and is headquartered in Greenwich, Connecticut.

© 2023 Private Equity Professional | August 30, 2023