Kettle Foods to be sold for $615 million
The deal nearly doubles the investment made by Lion Capital LLP, the London-based private equity firm that bought Salem-based Kettle in 2006 for an estimated $280 million to $320 million.
Founded in 1978, Kettle employs about 730 people and generated sales of $235 million in 2008, according to Just Food, an industry research and analysis group.
Kettle is a leader in sustainable practices — claiming the first LEED-certified food manufacturing plant and running a fleet of company cars on recycled chip-frying oil — and was named in November one of America's hottest brands by AdAge.
Prior to being acquired by Lion Capital, it was a privately held maker of natural potato chip products.
If the deal goes through, it will join the roster of brands within publicly held Diamond (NASDAQ: DMND), a San Francisco-based packaged foods company with brands including Emerald nuts and Pop Secret popcorn.
The move gives Diamond entry into the potato chip market, making it a player in a combined $9 billion portion of the snack foods market across all its brands.
In a news release, Diamond said the acquisition will add more than $250 million to its annual revenue, which reached nearly $560 million last year, while nearly doubling the company’s earnings before interest and taxes.
“We have taken a very deliberate approach toward screening possible acquisitions, focused on premium brands with growth potential that have synergy with the customer segments we already serve,” Diamond’s CEO Michael J. Mendes said in a prepared statement. “We believe Kettle Foods is a strong fit with the capability to provide solid financial returns for our shareholders, and we plan to invest behind the brand in several areas to position it for long-term success.”
Lion was reportedly seeking 10 times Kettle’s annual earnings, or around $700 million, according to a December report in the Wall Street Journal.
While owned by Lion, Kettle’s revenue grew double-digits annually while profits rose 30 percent per year, according to Lyndon Lea, a partner in the private equity firm. Its manufacturing capacity doubled thanks to an investment in a new plant in Wisconsin.
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