L Catterton has entered into an agreement to sell Ainsworth Pet Nutrition to The J.M. Smucker Company for $1.9 billion. Ainsworth Pet Nutrition was founded in 1933 by George Lang and L Catterton invested in the company in 2014 in partnership with the founding Lang family.
Ainsworth Pet Nutrition manufactures and distributes healthy pet foods and treats. The company emphasizes the use of real ingredients and essential nutrients including clean protein sources like bison and other fish products; vitamins and minerals; and grains and vegetables. Ainsworth sells its products online and through a network of independent pet specialty stores, supermarkets, and grocery stores. The company is headquartered 90 miles north of Pittsburgh in Meadville, PA (www.ainsworthpets.com).
During its term of ownership, L Catterton and the management team of Ainsworth grew the business by focusing on marketing and operational enhancements. Specifically, the company expanded its super and ultra-premium pet food offerings and positioned Nutrish, its flagship brand of all-natural dog food and treats, as an industry leader. Ainsworth also formed strategic partnerships with key retailers and expanded distribution in the food, drug, and mass channel. All told, Nutrish revenue grew by sixfold over L Catterton’s ownership term. Other strategic efforts included the development of new products and the acquisition of Triple T Foods in June 2017. Ainsworth also drove manufacturing cost reductions and operational efficiency improvements to significantly enhance margins.
“L Catterton’s extensive operational and industry expertise made them the ideal partner for Ainsworth to help transform our business,” said Jeff Watters, President and CEO of Ainsworth. “With L Catterton’s support, we implemented a strategy to invest in the premium Nutrish brand through consumer advertising and trade programs, while driving manufacturing efficiency across the business, enabling us to achieve dramatic growth and success.”
L Catterton invests from $50 million to $400 million of capital in consumer-focused companies. Areas of specific interest include food and beverage, retail and restaurants, consumer products and services, consumer health, and media and marketing services. The firm was founded in 1989 and has raised over $14 billion of equity capital across six funds. L Catterton has been active in the pet food and pet care sectors before. Current and past investments include Inspired Pet Nutrition, Just Food For Dogs, Lily’s Kitchen, Nature’s Variety, PetVet Care Centers and Wellness Pet Food. L Catterton has 17 offices globally and is headquartered in Greenwich, CT (www.lcatterton.com).
In 2016, Nutrish was named the Fastest Growing U.S. Pet Food Brand by Euromonitor International and the brand was also the fastest-growing brand across all consumer packaged goods categories in 2016, as tracked by A.C. Nielsen. “When we partnered with the Lang family and Ainsworth in 2014, we saw a great opportunity to help a strong brand reach its full potential,” said Scott Dahnke, Global Co-CEO of L Catterton. “Working with the Lang family and management, we were able to support the rapid growth of the Nutrish brand through targeted marketing and advertising programs to create a market leader, while improving manufacturing and supply chain operational efficiencies. We are pleased to have participated in Ainsworth’s tremendous success. Today’s transaction represents a terrific outcome for the business, which will thrive and grow together with Smucker.”
The J. M. Smucker Company (NYSE: SJM) is a manufacturer of fruit spreads, ice cream toppings, beverages, shortening, peanut butter, and other products. The company was founded in 1897 and is headquartered in Orrville, OH (www.jmsmucker.com).
Smucker’s anticipates that Ainsworth will contribute net sales of approximately $800 million in the first full year after closing of the transaction. Annual cost synergies of approximately $55 million are expected to be fully realized within three years after closing, with approximately $25 million anticipated in the first year. After giving effect to the first year of synergies, Smucker’s expects the acquired business to generate EBITDA of approximately $110 million in the first full year after closing. The all-cash transaction, which Smucker’s will fund with debt, is valued at $1.9 billion, prior to an expected tax benefit related to the acquisition with a present value of approximately $200 million. After factoring in the estimated tax benefit and anticipated annual cost synergies of $55 million, the purchase price represents a multiple of approximately 12 times EBITDA. Looked at another way, from the perspective of Ainsworth, the $1.9 billion purchase price is a multiple of approximately 18.5 times unadjusted EBITDA.
“Ainsworth Pet Nutrition is an excellent strategic fit for our company, as the Nutrish brand adds another high-growth, on-trend brand to our pet food portfolio,” said Mark Smucker, Chief Executive Officer. “Their team has done a tremendous job growing this business, building Nutrish into one of the most recognizable premium pet food brands in the United States. We look forward to working with the talented Ainsworth team, as we know their passion for pets runs as deep as ours.”
“We have been blessed with extremely talented, hardworking people across our organization,” said Sean Lang, Executive Chairman of Ainsworth. “I am particularly proud of how, with L Catterton’s support, we were able to reach new heights while maintaining the commitment to nutrition and quality ingredients that has been at our core since my family founded Ainsworth more than 75 years ago.”
© 2018 Private Equity Professional | April 5, 2018