Last month Willis Stein & Partners completed its purchase of Jays Foods, a deal that bolstered the firm’s push in the snack and chip space. The purchase, which closely followed the $100 million acquisition of Fiddle Faddle maker Lincoln Snacks in March, was valued at $26 million.
Willis Stein Co-founder and Managing Partner Avy Stein points to the firm’s 2002 investment in Roundy’s, a Wisconsin-based food wholesaler and retailer, as to why the firm found the snack space compelling. “The feedback we were able to access from owning Roundy’s gave us insight into what kind of product innovations retailers are looking for,” he said. “We know where the niches are, and owning Roundy’s gives us a great window seeing how we can attack those areas.”
The firm is also drawn to the disjunction seen in the snack food sector. Outside Frito Lay, Stein noted, “everything else is really fragmented.”
To run the company, Willis Stein aligned itself with Heinz and Frito Lay Veteran Tim Healy, who is serving as 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.
“[Jays] is primarily a Midwestern brand, but it’s very strong there and has certain elements that could have a more national appeal. Crunchers, for example, is now being distributed beyond the Midwest,” Stein said.
To grow the business, Willis Stein will continue to look for additional acquisitions, and as time goes by, will integrate those deals to take advantage of available synergies. The firm anticipates making around six acquisitions in total. The combined company, which already generates roughly $200 million in revenue, could one day be large enough to go public, Stein said, although the firm has yet to map out any exit for the business.
Prior to being sold to Willis Stein, Jays had endured a rather difficult stretch, as made obvious by its bankruptcy filing. According to Stein, the successive deaths of three members in the family that owned the business put a significant strain on the company.
And before Willis Stein would agree to buy the company, the firm needed Jays to rinse off certain liabilities on its balance sheet. “There was a judgement against Jays over a failed potato chip deal in Japan, costing about $15 million, and other restrictive agreements that also needed to be cleansed out before we bought the business,” Stein said.
Now that Jays has been added to the Lincoln platform, Willis Stein expects the company to regain its strength through synergies with Lincoln. Jays, Stein added, “Was starved for working capital.” He expects the company to immediately benefit from investments in its plant that will improve efficiencies and longer term, he said the company will possibly add new products off of the Jays platform.
Buyer: Willis Stein & Partners
Target: Jay Foods
Purchase Price: $26M
Advisor: WS: Mesirow Financial
Legal Counsel: WS: Kirkland & Ellis