China's state-owned Bright Food Group has agreed to buy Australian branded food business Manassen Foods, giving it an enterprise value (EV) of over A$500 million ($516 million), a person with direct knowledge of the matter told Reuters on Sunday.
Bright Food is buying 75 percent stake in Manassen, which is being sold by CHAMP Private Equity. The deal will mark Bright's biggest ever overseas acquisition, the person said, after missing out on some offshore transactions in previous few attempts.
Existing shareholders and management will continue to own the rest of Manassen Foods, the source added.
The Shanghai-based Bright Food has been actively looking for acquisitions overseas to boost its profile and cater to a rapidly growing domestic market. However, it has been unsuccessful so far with a string of failed bids that includes CSR's sugar business and French yoghurt maker Yoplait.
"Bright Food has big plans for Manassen and this gives them a beachhead in Australia," the person added.
Bright Food, which makes the famous "White Rabbit" candy, was also reportedly in talks to buy U.S. nutritional retailer GNC and Britain's United Biscuits, but talks fell apart over pricing, terms and uncertainty over regulatory approval.
Despite the setbacks, Bright Food is keen to expand into overseas markets to grow its dairy, sugar, wine, food industry and agriculture businesses among others, a company spokesman previously said.
Last year, the company bought a controlling stake in New Zealand's Synlait Milk.
The source said an announcement regarding Manassen's purchase is expected as early as Tuesday after the two companies formally sign the deal on Monday. CHAMP, an Australian buyout fund, acquired Manassen Foods in 2006. It owns Sunbeam and Angus Park dried fruits and Margaret River Dairy.
The source declined to give Manassen's equity value, but including debt Manassen will have a total value of more than A$500 million. Food Holdings Pty, the parent of Manassen Foods, had earnings before interest, tax, depreciation and amortization of A$50.4 million for the 12 months ended June 2010, according to company accounts.
CHAMP, which ran a dual-track IPO and sale process, finally agreed to sell the business to Bright Food as the IPO markets in Australia have been extremely tough.
There has been a drought in Australian share offerings due to soft equity markets, with two floats pulled in June and no IPOs worth more than A$100 million reaching the market.
The source declined to be identified as the deal was not public yet. Bright Food and CHAMP could not be reached for an immediate comment.