Quadrant Private Equity is understood to have had at least four global confectionery manufacturers eyeing up its company RiteBite, the owner of iconic Australian sweet brand Darrell Lea.
The understanding is US-based Hershey has looked at financial details of the business, along with Mars, Nestle and Mondelez. Investment bank UBS has been working on the sale.
Many believe Mondelez — the snacks giant behind Oreos, Toblerone and Cadbury — is the logical owner, but a sale will no doubt come down to timing and whether it can gain clearance from the Australian Competition & Consumer Commission.
The price of cocoa has soared to record highs, making chocolate more expensive than ever in 2024 on the back of the adverse weather and global inflation.
Rite Bite has commodity hedging in place, but it will eventually roll off.
There are estimates a price of about $700m is achievable as RiteBite is positioned to generate about $70m of annual earnings before interest, tax, depreciation and amortisation.
Quadrant bought licorice and Rocklea Road manufacturer Darrell Lea in 2018 for about $200m before creating RiteBite the next year with brands including New Zealand’s RJ’s and Life Savers, Well Naturally, The Bar Counter, Munchme, Systemax, Planet Food, CrispyFruits and Smooze.
Talk of a sale comes after The Wall Street Journal reported last week the US Bureau of Labour Statistics had said in its most recent report chocolate sellers were receiving substantially more money for their products than last year, with the producer-price index for chocolate and confectionery manufacturing from cacao — raw and unprocessed cocoa beans — more than 50 per cent higher than at this time last year.
The result was lower sales in the category. NielsenIQ, citing TD Cowen analysts, said there had been a 1.6 per cent decline in sales for the four weeks ended October 19 in the United States in a sign of “a rather weak Halloween” for leading chocolate-maker Hershey.
The average cost for 16 ounces of chocolate sweets for the 52 weeks ended October 6 was $US9.19, according to data from market research firm Circana, up nearly 40 per cent in the past five years.
Quadrant is picking the right time to return RiteBite to the market as its Fitness and Lifestyle company, which owns Fitness First Australia, staged an improved performance for the year to June.
As reported by DataRoom at the weekend, it reported a 5 per cent lift in its sales to $685.6m from $651.8m in the previous financial year, while its loss narrowed to $222m from $290.7m in the previous year.
Fitness and Lifestyle comprises Fitness First Australia and Goodlife Health Clubs, Jetts Fitness in New Zealand and Thailand, Zap Fitness, Barry’s and Emily Skye FIT, and was created by Quadrant following a series of acquisitions.
The company’s borrowings are almost $2bn, increasing from almost $583m in the previous corresponding year.
Run by Chris Hadley, the Sydney-based private equity group Quadrant has made major profits on various investments, but recently handed the keys of its restaurant chain business, which owns Rockpool Bar and Grill, to lender Metrics Credit Partners.
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