Two of Australia’s top 100 food and beverage companies, Patties Foods and Vesco Foods, look set to be acquired by APAC private equity powerhouse PAG. Terms of the deal have not been disclosed, but the companies’ combined revenue is more than $600 million.
PAG already has a large local footprint in Australia and New Zealand with Craveable Brands (Red Rooster, Oporto and Chicken Treat) and chicken processor Cordina Group.
PAG Private Equity ANZ managing director Sid Khotkar said the acquisitions serve to strengthen its presence in the region.
“We are excited about this unique opportunity to take some of Australia and New Zealand’s best-loved brands to the next level.
“Over the past few years, PAG has had the privilege of working with several leading local companies, and we are looking forward to putting that expertise to work in support of Patties and Vesco,” Khotkar said.
Patties is the trading name for the foreign-owned private company Australasian Foods Holdcowhich is owned by Pacific Equity Partners and manufactures chilled and frozen food products.
It was #55 on the Food & Drink Business’s 2021 Top 100 Food & Drink Companies report, having experienced a rapid move up the list after it purchased Bocastle Pastries Foods in 2019. Its revenue in FY20 was $400 million.
Patties brands include Four ‘n Twenty, Patties, Herbert Adams, Boscastle, Nanna’s, Ruffie Rustic Foods and New Zealand brand Leader.
In February 2021, Patties sold its two Victorian manufacturing plants in a sale-and-leaseback offering, raising around $130 million.
Patties Foods CEO Paul Hitchcock said the company wasn’t in the business of property investment and the move would free up funds for growth. It took on a 30-year lease for the Bairnsdale and Packenham sites.
Meanwhile, Catalyst Investment Managers is the parent company for locally owned Heat to Eat Holdings, which operates as Vesco. Vesco was #86 on the Top 100 list, with revenue for FY21 $230 million.
Vesco was established in the 1970s as Kailis and France Foods, rebranding in 2009 to Vesco Foods. It specialises in manufacturing ready meals, with brands Lean Cuisine, Super Nature, On the Menu, Annabel Karmel, and Jarraballi and exports to Japan, South Korea and Singapore.
While PAG has a substantial business in Australia, the reality of its foreign ownership means the Foreign Investment Review Board may decide to take a closer look at the deal.
Similarly, the combination of Patties and Vesco sees PAG owning a significant bite of the frozen aisle, from meat pies and plant-based burgers to ready meals and desserts. The Australian Competition and Consumer Commission (ACCC) may have some thoughts on that.
Patties CEO Paul Hitchcock said the acquisition is recognition of the company’s reputation as a respected local food manufacturer.
“It presents a significant opportunity for Patties Foods, unlocking further investment into market leading innovation, well-known brands and manufacturing capabilities,” Hitchcock said.
For Vesco CEO Bernie Pummell, combining the two companies presents new opportunities.
“It’s a significant step forward for Vesco Foods,” he said.
