food ingredients

One Rock Capital Partners has agreed to acquire publicly traded Innophos for $32 per share in cash in a transaction valued at approximately $932 million. This transaction has been unanimously approved by the board of directors of Innophos.

Innophos (NASDAQ: IPHS) produces ingredients that are used in food, health, nutrition, and industrial applications. The company’s ingredients include phosphates, phosphoric acids, as well as other mineral, enzyme, and botanical-based products that are used as flavor enhancers in beverages; electrolytes in sports drinks; texture modifiers in cheeses; leavening agents in baked goods; and calcium and phosphorus fortification in food and beverages.

Other products include sodium tripolyphosphate (STPP) which is used in industrial and institutional cleaners, automatic dishwashing detergents, and consumer laundry detergents; and granular triple super-phosphate (GTSP), a fertilizer product used to increase crop yields in various agricultural sectors. Innophos was founded in 2004 and is headquartered in Cranbury, NJ with manufacturing operations across the United States, Canada, Mexico and China.

“After careful consideration and a thorough review of our strategic alternatives, including an outreach program to multiple potential financial and strategic partners over several months, the Board determined that a sale to One Rock is in the best interest of all of our stakeholders,” said Kim Ann Mink, the chairman, president and chief executive officer of Innophos.

For the trailing four quarters ending September 30, 2019, Innophos had preliminary trailing four-quarter revenues of $759 million with an EBITDA of $77 million. Based on the purchase price of $932 million, this equates to a valuation multiple of just over 12x.

“Innophos’ innovative ingredient solutions are used by world-leading brands across a wide range of attractive food, health, nutrition and industrial markets,” said Tony Lee, a managing partner of One Rock. “The company has a strong foundation and a transformative growth strategy. In drawing upon One Rock’s extensive experience, part of our goal is to maximize Innophos’ growth potential by continuing to expand its presence in high-growth food, health and nutrition markets, while further strengthening and optimizing its cash-generative core business.”

One Rock invests in companies that are active in the chemicals and process industries; specialty manufacturing and healthcare products; business and environmental services; and food manufacturing and distribution. The firm has a strategic relationship with Mitsubishi Corporation which provides resources to One Rock and its portfolio companies.  One Rock was formed in 2010 by managing partners Tony Lee and Scott Spielvogel and is based in New York.

The agreement between One Rock and Innophos includes a 30-day “go-shop” period during which the company, assisted by its legal and financial advisors, will solicit alternative acquisition proposals.

Lazard is the financial advisor to Innophos and Baker Botts is providing legal services. RBC Capital Markets is the financial advisor to One Rock with Latham & Watkins providing legal services.

The closing of this transaction is expected to occur in the first quarter of 2020.

© 2019 Private Equity Professional | October 23, 2019

The Riverside Company has acquired Parker Products, a developer and manufacturer of specialty ingredients used by food and beverage companies.

Parker Products makes short-run, made-to-order batches of toppings, inclusions, grinds, flavor bases, icings, swirls, coatings and other ingredient related items. The company’s customers include large and small blue chip customers, across various end markets and product categories. Parker Products is headquartered in Fort Worth, TX (www.parkerproducts.com).

“Parker understands what’s trending in the food industry, and has the talent and know-how to meet anticipated needs for a demanding customer base,” said Riverside Managing Partner Suzy Kriscunas. “They are incredibly nimble and respected, which is critical in the dynamic world of food ingredients.”

Parker Products traces its roots back to the late 1920s when the ice cream cone novelty “drumstick” was invented. The ice cream cone concept originated at the 1904 World’s Fair in St. Louis when an ice cream maker at the fair discovered that he ran out of bowls to serve ice cream. He still had ice cream to sell, so he asked a waffle vendor to roll some waffles into cones for his ice cream. In 1928, the Parker Brothers – Bruce, I.C. and J.T. – added to the invention by adding a chocolate coating with nuts to it. One of the brothers’ wives said that this invention looked like a chicken leg and The Drumstick Company was born. The Parker brothers sold the rights to the “Drumstick” brand to Nestlé in 1991.

“Parker has been a nimble thought partner for its customers and has really excelled when presented with complex product opportunities,” said Riverside Vice President Conner Harris. “The overlap of the transaction and this demand presented an opportunity to build out a new, state-of-the-art facility, increase capacity substantially and introduce new capabilities to improve and expand current product lines.”

“Parker is an outstanding company and we’re looking forward to partnering with strong founders that will remain significant owners and their team to accelerate growth,” said Riverside Partner Meranee Phing. “As the food industry changes and consumers demand more unique and clean label products, Parker has the right capabilities, strong growth potential and the track record of being able to deliver for customers. We’re excited to partner with a great leadership team to take the company to new heights.”

The Riverside Company is a global private equity firm focused on investing in and acquiring growing businesses valued at up to $400 million. Since its founding in 1988, Riverside has invested in more than 480 transactions and its portfolio includes more than 80 companies. The firm is headquartered in New York with 16 additional US and international offices (www.riversidecompany.com).

Parker joins a growing portfolio of specialty food and beverage companies at Riverside, and should benefit from the firm’s expertise in this area led by Riverside Senior Food & Beverage Advisor Richard Lan. Riverside will work to source and integrate add-on acquisitions for Parker Products during its hold period.

Working with Ms. Kriscunas, Ms. Phing, Mr. Harris and Mr. Lan on the transaction for Riverside were Senior Associate Fei Ren, Associate Harrison Petts, Operating Partner Ron Savelli, Operating Executive Hayden Cotterill, and Operating Executive, Finance Rob Carraway. Partner Anne Hayes helped secure financing for the transaction. Origination Principal Jim Butterfield sourced the transaction for Riverside.

Madison Capital and GMB Mezzanine Capital provided financing to support the acquisition and Jones Day provided legal services.

© 2017 Private Equity Professional | October 2, 2017