Lion Capital to more than quadruple its money with Bumble Bee sale

The sale of Bumble Bee is anticipated to generate about $440 million in expected proceeds and implies a near 40 percent IRR, the Dec. 18 communication from Kelly Mayer, a Lion partner, to LPs, said. The sale to Thai Union Frozen Products represents a 10.5x multiple, Mayer said.

“With respect to earnings development under our ownership, Bumble Bee maintained and grew gross margins through disciplined pricing actions, leading to adjusted EBITDA climbing to over $150 million this year, the highest level of EBITDA in the company’s history,” Mayer said in the memo.

On Friday, Thai Union Frozen Products said it would buy Bumble Bee for $1.5 billion. San Diego-based Bumble Bee is known for its tuna and canned pink salmon. Brands include Sweet Sue, Brunswick, Wild Selection as well as Bumble Bee. The company produces $1 billion in annual sales on estimated 2014 EBITDA of $145 million, a press release said.

Lion, a London private equity firm, acquired a majority stake in Bumble Bee in 2010 for $980 million or about 7.5x EBITDA, Buyouts has learned. The PE firm invested about $150 million equity and, a year later, got back roughly one-third when Bumble Bee paid out a distribution to shareholders.

Bumble Bee went up for sale earlier this year. The auction attracted the interest of several PE firms as well as strategics Mitsubishi Corp., Hormel Foods Corp., Post Holdings and Thai Union, Bloomberg News reported. Thai Union, which owns rival Chicken of the Sea, won the process because it had the highest bid, Buyouts has learned.

The PE firm used its third buyout fund, Lion Capital III LP, to acquire Bumble Bee. The seafood company was Lion’s first U.S.-only transaction and is the first exit for Fund III, which collected 1.6 billion euros in 2010. The pool is generating an average IRR of 21.23 percent and a 1.59x average multiple, according to data provider Bison.

Fund III is about two-thirds committed. Lion Capital is reportedly expected to launch marketing for its fourth fund in 2015. It’s unclear how much the firm will seek to raise.

Ben Frost of Morgan Stanley and David Baron of Rothschild advised Lion Capital/Bumble Bee. UBS provided financial advice to Thai Union.