For Ardian, the carve-out of French food safety company Kersia in November 2016 was the first step in creating a huge market opportunity.
Global food health and safety regulations were improving, threatening to raise costs of compliance, but the sector remained fragmented. “We had a conviction that the food disinfection [market] was about to consolidate because of regulatory constraints,” says Thibault Basquin, head of Americas investments for Ardian Buyout.
This market view, coupled with Ardian’s prior experience backing disinfectant company Laboratoires Anios, set the firm on the path to build a global leader in biosecurity. “We had been tracking it [Kersia] for a while; but it took us a year to negotiate the deal,” Basquin says.
Kersia, originally known as Hypred, contributed 3 percent in revenue to the independent family-owned agribusiness, Groupe Roullier. Basquin says that for the conglomerate, the question was: “Should we grow Hypred, which is a small part of our business, or should we divest it?”
Eventually, the firm convinced the family to sell the business for over $250 million or 11x EBITDA, while concurrently looking at other add-ons for the platform. Although the deal size was smaller than Ardian’s typical investment range, the firm believed it could double it.
Within four years, what started as a Western European company focused on the cattle industry – primarily cows – evolved into an infection control business aimed at food safety, all the while growing four times in size.
“It was our intention to diversify it both in terms of end markets and geography; we wanted the company to also address the poultry and beverage markets,” Basquin says.
Kersia relied on acquisitions to enter new market segments. Under the ownership of Ardian, Kersia closed on seven add-on acquisitions and a minority investment, which were all proprietary, Basquin says.
Starting with German food and beverage disinfectant player AntiGerm, the tucks-ins allowed the business to grow its revenue by 4x from $127 million to over $525 million. It expanded to operate 23 sites with 1,700 employees, up from seven sites and 400 employees at entry.
During Ardian’s hold, there was also a shift to a model that prioritized sustainable and green product solutions over an entirely chemical-based brand.
“Ardian enabled us to acquire the companies that we needed to achieve our goals… in areas where we needed to make progress,” Sébastien Bossard, Kersia’s chief executive, said in a case study of the company. The study highlighted that 20 percent of Kersia’s revenue comes from green and eco-friendly solutions.
Another addition was human capital. In order to integrate with other businesses and cultures smoothly, “we significantly strengthened the processes internally,” Basquin explained.
In the roster of acquisitions, Kersia most recently bought food and breweries specialist Sopura, closing the deal in December. “It took us more than four years of discussions to convince them,” Basquin said. The purchase took place during signing and closing of the sale of Kersia to IK Investment.
Although Kersia was deemed essential during covid-19, which accelerated growth, Ardian believed it was time to move on. “After four years of partnership we had more than achieved our original plans; it was a great time to think about the next step,” Basquin says.
The hard work paid off as the limited auction process, which kicked off last summer, attracted both strategics and private equity buyers. The strategic buyers wanted to visit the site in-person, which was difficult to organize due to the travel restrictions.
In the end, pan-European private equity firm IK Investment Partners prevailed, agreeing to buy Kersia in a deal worth more than $1.5 billion, translating to 15x EBITDA. “IK paid a price slightly above the strategics,” Basquin explains. Ardian generated an IRR of over 35 percent and more than 3x gross money multiple.
For Ardian and Kersia, it’s been a healthy climb up the food chain.
Correction: This report has been updated with the correct description of CAGR in the chart.
The winning numbers
Price IK paid for Kersia in October
Deal’s EBITDA multiple
Compound annual growth rate for Kersia’s organic revenue growth the four years it was owned by Ardian
Gross IRR that Ardian made on the deal
Gross money multiple on the transaction