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PRIVATE EQUITY
PE rms hungry for food and drink deals
GI Partners' acquisition of Far Niente winery and Geneva Glen Capital's purchase
of Dianne's Fine Desserts are the latest private equity deals in the food and
beverage industry.
By Nathaniel Shahan Updated on June 20, 2016, 06:38 PM ET
Private equity is showing its appetite for food and wine companies, with at least four investments over
the past month.
Headlining the investments is GI Partners' acquisition of Napa Valley winery Far Niente Wine Estates for
undisclosed terms. The private equity rm announced on Thursday, June 16, it had closed the deal, rst
announced May 17.
The size of GI Partners' stake was not disclosed, but Far Niente CEO and director of winemaking Dirk
Hampson remains a shareholder, along with Far Niente president Larry Maguire and winery owners Beth
and Eric Nickel.
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2. Far Niente includes its namesake winery in Oakville, Calif., as well as Dolce, Nickel & Nickel, EnRoute and
Bella Union, producing wine from 10 northern California vineyard properties and two facilities. The Nickels
purchased the Far Niente winery in 1979, 60 years after it was abandoned during Prohibition.
GI Partners, based in San Francisco, did not disclose any future plans for the company, but according to
the June statement, changes in marketing strategy and new technologies have helped GI Partners triple
revenue and pro t at Duckhorn Wine Co. of St. Helena, Calif. The rm invested in Duckhorn through GI
Partners Fund II LP in October 2007.
GI Partners said it also has provided investment oversight for a portfolio of vineyards owned by the
California Public Employees' Retirement System.
"We share their vision and long-term goals to continue as an independent ne wine company," GI Partners
managing director David Mace said in the May statement. "Our investment supports the focus on ongoing
consistent production of high-quality wines."
In the statement, Maguire made assurances that relationships with growers, distributors and accounts at
all the wineries will remain in place. Hampson also said Far Niente's production, sales and marketing
employees would remain with the company.
Hampson and Maguire appear to be staying in their positions as well.
Of cials at Far Niente were not immediately available for comment, and GI Partners did not immediately
respond to requests for comment.
While Far Niente has paired nicely with GI Partners, Australia's Treasury Wine Estates Ltd. still is looking
for a buyer for its California wineries.
On June 3, the world's second-largest winemaker announced plans to consolidate its California
winemaking operations. Vineyards on the block include the Central Coast's Paicines Winery.
Sales and restructuring, the company said, will allow Treasury to invest in its remaining U.S. wineries and
reach a $25 million cost-cutting target announced last year.
Shares of Treasury closed Monday on the Australian Securities Exchange at A$9.96 ($7.36), up A$0.09.
Wine isn't the only thing on private equity's menu, however. Superior Capital Partners LLC of Detroit on
Tuesday said it had sold frozen thaw-and-serve dessert company Dianne's Fine Desserts Inc. to Geneva
Glen Capital LLC. The deal closed June 10, according to a separate statement from the buyer.
Superior did not disclose why it decided to exit its position or the sale price.
GGC managing director Adam Schecter also declined to disclose a deal value but said the business was
purchased debt free with cash. GGC typically invests up to $50 million in capital in companies with Ebitda
between $3 million and $20 million, according to the website of the Chicago rm.
According to Superior managing partner Mark Carroll, the rm put Dianne's on the market in January. He
said Superior engaged Lincoln International LLC to assist with the auction process of the Newburyport,
Mass., company.
Dianne's management continues to hold a signi cant equity interest in the company. Schecter declined to
disclose the exact holdings but said that while GGC holds a majority stake, Dianne's management holds
"more than is customary" in PE deals.
Dianne's CEO, Mike Knowles, was a GGC operating partner before joining the company, and the rm also
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3. has a relationship with Dianne's president Dan Scales, according to the statement. Schecter, however,
said GGC's interest in Dianne's was not exclusively related to its relationship with Knowles.
Although Dianne's represents GGC's rst food deal, "We've had an interest in food for a long time,"
Schecter said, noting that GGC had tracked Dianne's for the four years since it was acquired by Superior.
Superior acquired Dianne's in 2012 from HJ Heinz Co. and subsequently added on Daystar Desserts LLC
of Ashland, Va., in December 2014.
Carroll said that in the four years Superior owned Dianne's, gross margins doubled and it posted revenue
growth of more than 50%, but "a lot more growth" remains in the company.
GGC has not released speci c plans for the future of Dianne's but said in the statement that it will explore
add-on acquisitions. Schecter added that GGC will look to add branded products to Dianne's lineup.
Dianne's sells its deserts to national restaurant chains and the bakeries for national grocery stores.
At GGC, managing director Jeff Gonyo, principal Tom Wuellner and associate Greg Irons also worked on
the deal.
Superior managing director Andy Wiegand worked on the deal with Carroll.
Dianne's did not immediately respond to request for comment.
Another dessert deal came earlier this month when an af liate of FundCorp Inc. acquired Gigi's Cupcakes
of Nashville. Terms of the deal were not disclosed in a June 2 statement from the Fort Worth rm.
Michael Poates, who has worked with FundCorp on a number of food-related deals, was named vice
chairman of Gigi's.
Poates declined to disclose details of the deal.
Gigi's has more than 100 franchised locations selling a variety of fresh-baked cupcakes and other
desserts.
FundCorp has previous experience investing in franchised chains, last June acquiring Gatti's Pizza of
Austin, Texas. The chain has franchises across Texas and 12 other states.
Poates worked on that deal as well and has held leadership positions with Papa John's, Whataburger and
Dairy Queen.
Gigi's declined to comment beyond FundCorp's statement.
In an international deal, meanwhile, Patties Foods Ltd. of Melbourne, Australia, on June 1 said it had
agreed to be acquired for A$1.65 per share in cash, or A$231.8 million ($171.3 million), by Australasian
Foods Bidco Pty. Ltd.
Australasian Foods, owned by funds managed or advised by Sydney's Paci c Equity Partners, would
acquire Patties' share capital through a scheme of arrangement.
Patties' directors recommended that shareholders vote in favor of the acquisition. The company
anticipated the scheme would be implemented in September.
Patties sells both sweet and savory baked goods under ve brands.
Of cials at Patties and Australasian Foods were not immediately available for comment.
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