International consumer products group PZ Cussons has acquired Australian premium baby food brand Rafferty’s Garden Pty Ltd for AU $70 million.
PZ Cussons said the acquisition, which marks the Company’s entry into the food and nutrition category in the Asia Pacific region, is part of its strategy to “develop or acquire brands which are, or have the potential to be, leaders in their categories”.
The Company said Rafferty’s Garden had grown over the last six years to be a “leading player” in the baby food category. According to data from market research organisation Nielsen, published in the ‘Retail World Grocery Guide 2012’, Rafferty’s Garden had 35.1 per cent value share and 27.5 per cent volume share of the $117.7 million wet baby food sector in Australia in 2012, and 23.3 per cent value and 29.8 per cent volume share of the dry baby food sector.
“Rafferty’s Garden is an excellent fit for our business and plays directly to our strategy of diversifying into the food and nutrition category in the Asia Pacific region,” said Rory Gration, PZ Cussons Sales Director for Australia and New Zealand.
“It is a significant move for the business and provides the platform for further growth in the Australian and New Zealand markets as well as creating further opportunities into export countries such as Indonesia and Thailand,” Mr Gration said.
PZ Cussons said the business is being acquired on a cash and debt free basis from cash and existing facilities, and is expected to earnings enhancing in the current financial year.
The Company said its understanding of consumers in the Asia Pacific market through its Cussons Baby brand will enable it to “maximize the geographic expansion of Rafferty’s Garden products”.
Rafferty’s Garden said the sale was “a great opportunity to expand the business internationally by leveraging PZ Cussons’ strength, reach and market know-how in the Asia Pacific region”.
The PZ Cusson’s acquisition of Rafferty’s Garden comes after the Australian Competition and Consumer Commission opposed a Heinz takeover of Rafferty’s Garden in June 2013.
Growth and opportunities
The business of Rafferty’s Garden experienced unprecedented growth after it was first launched in 2007 by British-born entrepreneur Adrian Pike, who had a restaurant background, and developed the early range with a food technologist and infant nutritionist.
The remarkable growth of the business’ lines through all of Australia’s supermarket stores and across most of Asia through an Asian-based distributor, attracted the Sydney-based boutique private equity firm Anacacia Capital and Sales Link Australasia to invest in a management buy-out in 2010. Sales Link Australia was responsible for field merchandising and order management for supermarkets and department stores.
The $70million sale of Rafferty’s Garden to PZ Cussons provides a lucrative return to the Anacacia Capital investors for their 3-year investment.
PZ Cussons is already well-known in Australia and the wider region for its Fast Moving Consumer Goods (FMCG) ranges such as personal care brand Imperial Leather, household cleaning brands such as Morning Fresh and Trix, and fabric care products such as Radiant, Duo, Reflect and Down to Earth.
The purchase of Rafferty’s Garden is a major diversification for PZ Cussons with expansion opportunities in both food and infant segments. The Company will be able to leverage off its Cussons Baby brand platform and markets across the Asia Pacific region.