Glenboden M & A Originations

Senoble buy –back discourages private equity from minorities in private dairy businesses

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Origination Status seller announcement of 'reverse buy -out'
Asset 25% stake in Senoble (France), no.1 domestic private label chilled dairy producer
Buyer Senoble family
Seller 3i, private equity manager
Buyer Rationale to regain 100% control
Seller Rationale acceptable valuation of minority shareholding with limited upside and no alternative buyers
NBs the 25% stake in Senoble was acquired by 3i in 2004
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It’s not every day that a family buys out a private equity investor, rather than the opposite. 3i made money here, for sure, given the near doubling of Senoble’s sales revenue since 2004 to surpass € 1 bln; but this was not a stellar investment for them, with Senoble’s acquisition performance being a disappointment. It provides a lesson that private equity should be careful about taking minority stakes in very cautious family businesses. On the other hand, Senoble has potentially been released to make acquisitions that have a more long-term perspective.

Senoble’s speciality is chilled milk –based desserts, 85% of which under private label with the remainder largely under a Weight watchers licence. It’s the third largest chilled dairy supplier in France, after Danone and Lactalis, but much less famous of course.

The purpose of 3i’s investment, in 2004, was to fund Senoble’s European expansion beyond France. Sure, its international business has increased to over 50% of sales, but this was largely thanks to better logistics for its export business to neighbouring countries. Senoble’s foreign acquisitions, on the other hand, were highly selective to put it mildly. The only real business acquisition was that of Elisabeth the Chef in 2007, but that was a no –brainer given the large and high –value nature of the UK chilled desserts market. The other acquisitions, in Slovakia and Italy, were little more than production facilities for serving the retail multiples in those geographies.

With private label set to take off in central Europe, Senoble may now, finally, make a more serious acquisition effort in that region. Unless of course the debt raised to buy out 3i straps them down.

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