Brynwood Partners VI L.P. announced that it has signed a definitive agreement to acquire a controlling stake in the Back to Nature brand food business through a joint venture partnership with Kraft Foods. Kraft Foods will continue to hold a substantial minority stake in the business and will have board representation in the joint venture that is to be formed. Terms and conditions of the transaction, which is scheduled to close in October, will not be disclosed.
Founded in 1960, Back to Nature is one of the original natural food brands in the U.S. The joint venture will initially offer Back to Nature products in four categories: (i) crackers, (ii) cookies, (iii) trail mixes & nuts and (iv) granola, while management of the Back to Nature macaroni and cheese business will remain with Kraft Foods. An iconic natural and organic brand, Back to Nature products are widely distributed in the U.S. through leading retailers in the natural, food, drug, mass and club channels.
As part of the transaction, Brynwood VI will appoint Vincent Fantegrossi as president and CEO of the new company. Fantegrossi previously served as president and CEO of Richelieu Foods, Inc., a Brynwood Partners V L.P. investment that returned over six times total invested capital and generated a gross internal rate of return of over 40 percent for the fund. Under Brynwood V’s ownership, Richelieu Foods’ sales grew from $100 million to over $250 million.
“We are excited to announce the Back to Nature transaction and are honored that Kraft Foods selected Brynwood VI as its joint venture partner,” said Henk Hartong III, senior managing partner of Brynwood VI in a prepared statement. Hartong III continued, “We look forward to growing the Back to Nature brand and helping it to achieve even greater success in both the natural and mainstream channels through select new product and new category introductions, while staying true to the mission of giving people truly flavorful, wholesome foods made with simple ingredients. We are excited to work with Kraft in this unique joint venture between a private equity firm and a consumer products company formed to maximize the value of a smaller brand in its portfolio.”
Brynwood Partners has developed a unique niche of being the lower middle market firm of choice for corporate divestitures. In its 28-year history, Brynwood Partners has acquired 36 corporate brands from 14 different corporate sellers, including the Back to Nature acquisition. Since January 2011, the firm has completed the acquisitions of 20 corporate brands in seven separate transactions. The Back to Nature transaction marks Brynwood Partners’ third transaction with Kraft Foods.
Brynwood Partners has a well-established track record of reviving smaller brands or businesses that are divested from large corporations. Some of Brynwood Partners’ investments, both current and prior include:
Zest bar soap and body wash (acquired from The Procter & Gamble Co.);
Turtles chocolate candy and Flipz chocolate covered pretzels (acquired from Nestlé USA, Inc.);
TrueNorth nut-clusters and Kretschmer wheat germ (acquired from PepsiCo, Inc.); and
Balance Bar energy / nutrition bars (acquired from Kraft Foods).
In each of these transactions, Brynwood Partners acquired the entire business. In the case of Back to Nature, Brynwood VI will acquire operating control, but will partner with Kraft Foods to maximize the value of the new company. Brynwood VI will have the opportunity to apply its operating discipline in partnership with a leading consumer products company.
“This deal has a unique structure where a large consumer company like Kraft Foods has identified a way to partner with a specialist like Brynwood Partners to increase growth of a non-core asset while maintaining a significant financial interest,” continued Hartong III. “We think that this is a very forward-looking concept, and we are delighted to be Kraft’s partner.”
Brynwood Partners has a strong investment track record in the food space. Brynwood V holds an investment in DeMet’s Candy Co., a leading U.S.-based chocolate confectionery company manufacturing and marketing the Turtles, Flipz, Treasures and TrueNorth brands. Brynwood VI owns the Balance Bar Co., a marketer of energy and nutrition bars and Pearson Candy Co., a leading manufacturer and marketer of widely recognized confectionery brands including Pearson's Salted Nut Roll, Pearson's Mint Patties, Pearson's Nut Goodies and Pearson's Bun. Additionally, in November 2011, Brynwood VI formed Sun Country Foods, Inc. to acquire the Kretschmer wheat germ brand and manufacturing facility.