Blog: Dean BestPension funds flexing muscles in M&A battles

Dean Best | 18 November 2013

The sale of UK biscuit firm Burton's Biscuit Co. demonstrates how pension funds should be viewed as a serious player in acquisitions in the consumer goods sector.

The Ontario Teachers' Pension Plan today (18 November) announced it had struck a deal to buy a majority stake in the manufacturer of Jammie Dodgers, Wagon Wheels and Cadbury biscuits for an undisclosed sum.

Like the acquisition price, we will not quite know just how competitive the auction of Burton's was, although, in a statement put out this morning, it was asserted the company attracted "interest from multiple high-quality bidders".

However, when it first started to emerge this spring that Burton's private-equity owners Apollo Global Management and CIBC wanted to sell, industry watchers were quicker to suggest potential trade or private-equity buyers than the likes of OTTP.

Cadbury owner Mondelez International, Pepperidge Farm biscuits owner Campbell Soup Co. and Finland's Raisio, with interests in UK confectionery were touted as potential buyers.

As the summer moved to autumn, private-equity firm Bridgepoint, which had just snapped up Polish biscuit business Dr Gerard, was put forward as a company that should take a look at Burton's.

Indeed, as the sale process moved into its final stages, Fox's Biscuits owner 2 Sisters Food Group and PE firms Apax Partners and CapVest were said to have bid for Burton's. But they were also joined in reports by OTTP, which today announced it had succeeded in agreeing a deal.

"With its portfolio of iconic brands, Burton’s is set to lead the premium biscuit market for some time to come and use product innovation to appeal to consumers looking for delicious treats and snacks inside and outside the home," Jo Taylor, the head of OTTP's London office, said.

Funds like OTTP have risen in international prominence in recent years. The fund owns stakes in a number of infrastructure assets in Europe and, in 2010, bought Camelot, which has the licence to run the UK National Lottery.

Earlier this year, The Canada Pension Plan Investment Board and Kainos Capital acquired food and drink assets including MSG Nutrients, salad supplier Earthbound Farms and Advanced Refreshment from PE firm HM Capital.

OTTP has held shares in food companies in the past - think Canada's Maple Leaf Foods - and the deal for Burton's marks its return to the space. It also further underlines how pension funds could increasingly vie with trade and PE firms for food assets up for sale.

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