The sale process for the Real Pet Food Company gets under way in earnest in July, but private equity firms hoping to line up to buy the asset may be disappointed.
DataRoom understands the business is targeting global trade buyers for the sale, initially at least.
Major pet food groups out of the US could be a major focus, including multinational food company Mars, which has a Mars Petcare division. Mars is the largest pet food company in the world, selling brands such as Whiskas and Pedigree.
Another is the toothpaste and household goods maker Colgate-Palmolive, based in the US, which owns Hills Pet Nutrition.
Colgate’s Hills bought the Prime100 fresh pet food business from Quadrant Private Equity this year for a price that valued the operation at $500m.
Houlihan Lokey advised on the sale after Quadrant invested in the business in 2021.
It was founded in 2014.
Other US-based pet food companies include General Mills, FoodScience, owned by Morgan Stanley Capital Partners and Ethos, a company formed from the merger of Natural Balance Pet Foods and Canidae LLC.
European food and drinks company Nestle is also big in pet food, while other European groups are Jollyes owned by TDR Capital and Butternut Box, backed by General Atlantic
The sale process is set to start in July through Citi and it is understood a broad number of strategic groups will be sought.
Strategic bidders can typically pay higher prices than private equity groups because of synergies they can achieve.
The current owners had already paid top dollar for the business, at about 15 or 16 times earnings before interest, tax, depreciation and amortisation and would want to get their money back.
Australia and New Zealand-listed EBOS had looked, but had walked away after the appointment of a new chief executive.
Real Pet Food describes itself as a leading international pet food company with operating businesses in Australia, New Zealand, China and Britain. It has long been rumoured to be for sale. It is the largest independent pet food manufacturer in Australia and among the 20 largest in the world, generating an estimated $130m to $140m of annual EBITDA.
It underwent a $243m refinancing in 2023, with existing investors injecting more capital into the business.
These included Chinese conglomerate New Hope Group, Singapore state-owned company Temasek and private equity firm Hosen Capital.
The company sells a range of products through grocery, pet speciality and e-commerce channels under brands including Farmers Market, Nature’s Gift, Billy + Margot, Ivory Coat, Love’em pet treats and Fussy Cat.
New Hope, Hosen Capital and Temasek purchased he Real Pet Food Company from Quadrant in 2017 for $1bn.
Sydney-based Quadrant had purchased VIP Pet Foods in 2015 for $410m, expanded the operations and renamed it the Real Pet Food Company, before selling it two years later.
The company, run by Germaine Chua, has 900 employees globally and operates seven manufacturing plants.
It also has pet treat maker Vet’s Best Products.
According to IBIS World, the Real Pet Food Company has 16.1 per cent of the Australian pet-food market and generated $488m of revenue and a $22m loss in 2023. Pet food companies sold for strong prices during the pandemic, when the rate of pet adoption soared.
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