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NEW YORK (Reuters) – Private equity firm PAI Partners said on Thursday it agreed to buy Alphia Inc from its owner J.H. Whitney Capital Partners, in a deal that people familiar with the matter said values the pet food manufacturer at about $1 billion, including debt.
Denver, Colorado-based Alphia was formed out of the merger of premium pet food manufacturers C.J. Foods Inc and American Nutrition Inc in 2020. It also owns LANI, an ingredient milling solutions company, and Veracity, a warehousing and logistics provider.
Reuters reported in May that Alphia’s owners were exploring a sale with the help of a financial adviser. J.H. Whitney has owned Alphia since buying its predecessor firm, C.J. Foods, from Trinity Hunt Partners in 2014.
Pet food companies have attracted healthy multiples from acquirers in recent years, amid a worldwide shortage of pet food due to increased demand and supply chain issues.
Notable recent deals include General Mills Inc (NYSE:GIS)’s acquisition of Blue Buffalo Pet Products Inc for nearly $8 billion, Mars Petcare’s acquisition of Champion Petfoods, and Clearlake Capital Group’s takeover of Wellpet.
Paris, France-based PAI Partners, which manages about 25 billion euros ($27.12 billion) of buyout funds, has recently made a push into the U.S. In 2019, it tapped private equity executive Maud Brown to head its U.S. team, and more recently hired Winston Song to lead its consumer dealmaking efforts in North America.
“We continue to see a number of attractive opportunities in the U.S. and are committed to building the PAI franchise in this market,” said Brown in a statement.
PAI Partners has a track record of investing in the food and beverage sector. In 2016, the private equity firm helped create ice cream company Froneri, after a merger between Nestle’s European ice cream business and PAI Partners-owned R&R.
PAI Partners currently also holds a minority stake in beverage contract manufacturer Refresco Group B.V., after buying the business with British Columbia Investment Management Corporation in 2017.
Alphia marks the second prominent acquisition for PAI Partners in the U.S., after it acquired Tropicana and other juice brands from PepsiCo (NASDAQ:PEP) Inc for $3.3 billion in 2021.
Goldman Sachs Group (NYSE:GS) served as financial adviser to Alphia, while Gibson, Dunn & Crutcher LLP served as legal counsel to J.H. Whitney and Alphia. Law firm Weil, Gotshal & Manges advised PAI Partners. Goldman and Jefferies Financial Group Inc provided committed financing for the deal, the sources cited above said.
($1 = 0.9218 euros)
