Brynwood deal spree may continue in 2014 after Joseph’s Pasta, DeMet’s

  • Joseph’s Pasta marks first platform deal from Fund VII
  • Brynwood makes 4x-plus on DeMets’s sale
  • Greenwich, Conn. firm’s three deals tap separate buyout funds

“We continue to be very active – keeping up the pace for the last five years,” Hartong, senior managing partner of the Greenwich, Conn. firm, told Buyouts. “We’ve done a lot of deals …and we continue to see an active market especially for lower middle-market companies.”

Taking aim at investments of up to $80 million of equity capital in each portfolio company, Brynwood’s three latest deals tapped into its three most recent buyout funds:

  • The Jan. 6 deal to buy frozen food brand Joseph’s Pasta Company from Nestle Prepared Foods Company for an undisclosed sum marks the first platform deal for Brynwood Partners VII LP, the firm’s $400 million fund that closed in September. Citing Brynwood’s deal with Richelieu Foods – one of its most successful exits – Hartong said, “We had a lot of success in the frozen food space and that made it a a logical fit for us.” 
  • Brynwood exited one of three remaining companies in the vintage 2004 Brynwood Parters V with its  $221 million deal to sell DeMet’s Candy Company to Yildiz Holding A.S., owner of the Godiva chocolate brand. The transaction was announced on Dec. 27. Hartong declined to discuss the return on the deal, but sources familiar with the transaction said it generated a return greater than 4x. Brynwood combined units purchased from Nestle under the DeMet’s platform in 2007 and built a 150-employee candy plant in Big Flats, N.Y. during its ownership.
  • Brynwood paid an undisclosed sum from the vintage 2008 Brynwood Partners VI to buy SnackWell’s cookies and snack business from Mondelez Global LLC. The deal is an add-on for Brynwood’s Back to Nature Foods Company platform, acquired in 2012. Mondelez owns a minority stake in Back to Nature as part of a spin-off transaction with Kraft. The deal closed in December.

Hartong said Brynwood continues to avoid the current lofty valuations of many target companies by identifying underperforming, non-core assets that could benefit from dedicated management teams.

“We don’t depend much on the credit markets to generate a return,” he said. “We do it from improving operating performance.”

LPs of Brynwood funds include Pennsylvania State Employees’ Retirement System, PNC Equity Partners, Prudential Financial and Grove Street Advisors.

(This story has been updated to correct the closing date for Brynwood’s SnackWell unit acquisition.)