Cerelia sponsor Ardian sees many options for type and timing of exit, investor says

Breaking News 5 June

Cerelia sponsor Ardian sees many options for type and timing of exit, investor says

Ardian Buyout group, majority owner of Paris-based Cerelia since 2020, expects to have options when the time comes to exit the international dough and baking business, said Christopher Sand, a New York-based managing director for the French private equity firm.

With revenue “well north of EUR 700m” and tracking to EUR 1bn (USD 1.1bn) by 2025, Ardian may evaluate an exit in 2024 to 2026, Sand told this news service. “The business is performing exceptionally well, and we are under no pressure to monetize,” Sand said. “We certainly want to wait for a liquidity event.” 

An exit could be a sale to another financial buyer or strategic player, but a possible IPO is “not the primary route due to our size,” he said. Ardian could also consider a continuation vehicle that allows it and some of its limited partners to stay invested, Sand added. 

Mergermarket predictive analytics suggest Ardian would likely exit Cerelia in the next 24 months, with an 80 out of a possible 100 Likely to Exit (LTE) score. 

Ardian would develop any exit strategy in partnership with Cerelia management, Sand said. Company management is collectively the second-largest shareholder after Ardian, followed by Continental Grain Company, which made a strategic investment of undisclosed size in Cerelia in March 2021. Sand characterized management’s stake as “comfortably larger than Continental Grain’s.” Cerelia is led by co-CEOs Guillaume Réveilhac and Walter Kluit. 

Established in 2012 through the merger of Alsacienne de Pâtes Menageres and Eurodough (the former Sara Lee International Bakery division), Cerelia specializes in ready-to-bake and ready-to-heat dough and pastry including pizza shells, pie crust, bread, pancakes, waffles and cookies. Under previous sponsor IK Investment Partners, the company expanded in Europe and entered North America and Asia through the 2015 acquisition of de Bioderij, a maker of pancakes and crepes under the Jan brand. Cerelia extended its reach in the UK, US and Canada by acquiring UK-based BakeAway in 2016 and Canada-based English Bay Batter in 2017. Its January 2022 acquisition of the UK-based Jus-Rol ready-to-bake dough business from General Mills is being challenged post-closing by the UK’s Competition and Markets Authority (CMA) on competitive grounds.

With Ardian’s backing, Cerelia has invested heavily in North America through M&A and organically through product launches and new production facilities in Ohio and Canada. Cerelia is equally interested in targets in North America and Europe in the size range of USD 5m to USD 50m in EBITDA, Sand said. Ideal targets include makers of ready-to-bake pizza crusts and other dough products in flow-wrap packaging and ready-to-heat pancakes and waffles, but also adjacent products he declined to name. Cerelia is less interested in acquiring finished baked goods such as cakes, cookies, breads and rolls, but adjacent product lines he declined to name could be of interest. 

With interest rates high and financial markets uncertain, Cerelia is taking a “measured and thoughtful approach to M&A,” he said. “We’ve already done quite a bit with acquisitions, so there is no requirement to complete M&A” in the near term, he said, adding that Ardian and Cerelia hear from a variety of investment banks in the US and Europe regarding assets in the market. Multiples, which are in the teens of EBITDA, are less important than “what we can do with” an acquired business. 

Ardian doesn't have any asset sales planned, Sand said. He declined to comment regarding the CMA, which in January ruled that Cerelia should unwind its acquisition of Jus-Rol, the largest supplier of dough-to-bake products to grocery retailers in the UK. For this report, Sand said the goal is to keep the Jus-Rol business whole.

Willkie represented Cerelia in its acquisition of General Mills’ European dough businesses including Jus-Rol.

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