Willis Stein Has Deal Spurt –

Willis Stein & Partners recently rang up a string of deals, making three acquisitions in the past couple months, with two purchases in the snack and chip space and another buyout in the payroll processing sector. The Stamford, Conn.-based buyout shop completed an acquisition of Fiddle Faddle maker Lincoln Snacks, and less than one week later, agreed to buy Chicago potato-chip maker Jays Foods out of bankruptcy. Those deals closely followed the firm’s acquisition of CompuPay, a provider of outsourced payroll processing to small businesses.

Willis Stein purchased Lincoln Foods out of the portfolio of Brynwood Partners, which held onto Lincoln subsidiary Signature Snacks Co. Terms of the transaction were not disclosed, although it has been reported to be valued at roughly $100 million. Lasalle Bank and BNP Paribas supported the deal with a senior debt package. As for the Jays Foods purchase, a Lincoln add-on that is expected to close in April, Willis Stein agreed to pay $26 million in a stalking horse bid.

“The snack food sector is very fragmented,” Willis Stein Managing Director Robert Froetscher said. “Obviously that means that there will be consolidation opportunities, which typically implies cost cutting and efficiency gains, but I also think there will be some significant organic growth opportunities through adding new products and expanding the channels of distribution.”

To run the company, Willis Stein aligned itself with Heinz and Frito Lay Veteran Tim Healy, who upon the completion of the deal, assumed the role of chairman and chief executive officer. Lincoln’s primary products include the Fiddle Faddle, Poppycock, Screaming Yellow Zonkers and Just the Nuts snack brands, and in 2003 the company had sales of $55 million, according to reports. Jays, meanwhile, produces Jays Potato Chips, Krunchers Potato Chips and O-Ke-Doke popcorn, as well as other products, and last posted annual revenues of $120 million. Lincoln was delisted from the Nasdaq in 1999, and taken private by Brynwood in 2001.

A Return To Familiar Ground

The acquisition of CompuPay essentially represents a return to the payroll processing industry for Willis Stein. The firm previously invested in Advantage Payroll, and in 2002 sold the company to Paychex Inc. for $315 million, bypassing a planned IPO for the business.

“We really like the payroll processing business,” Willis Stein MD Daniel Gill said. “We know this space pretty well from our prior experience, and we know the players in this space pretty well.”

Terms of the deal were not disclosed, although Gill did note that the purchase was supported with senior debt provided by SunTrust Capital.

In targeting CompuPay, Gill noted that he expects the company to provide a solid platform for other acquisitions. “This was the largest independent platform aimed at the smaller end of the sector, and they have really strong systems and processes that can be leveraged through adding customers.”

Additionally, Gill sees this business capitalizing on potential growth in the industry. “[CompuPay] is oriented to the small side of the market, an area that’s underpenetrated right now…Market penetration has grown from about 10% to 15% in the last few years, and analysts expect that to continue to grow.”

Willis Stein is currently investing out of its $1.8 billion Willis Stein & Partners LP fund, which according to Froetscher is about 50% to 60% invested.

Snapshot

Buyer: Willis Stein & Partners

Target: Lincoln Snacks

Purchase Price: $100M

Advisor: WS: Mesirow Financial; BP: Sawaya Segalas & Co.

Legal Counsel: WS: Kirkland & Ellis; BP: Edwards & Angell

Snapshot

Buyer: Willis Stein & Partners

Target: CompuPay

Legal Counsel: WS: Kirkland & Ellis

Accountant: WS: PricewaterhouseCoopers