Four bidders were due to “reconfirm” their offers on Monday, with three Australian private equity firms lining up against European buyout shop PAI Partners and its portfolio company R&R Ice Cream.
Fonterra, and its adviser First NZ Capital, is expected to work through the confirmations before tapping one of the bidders for one final round of negotiations.
And for dealmakers who have been burning the midnight oil churning through papers in the data room, that’s when the fun will begin.
It is understood bidders will be told which party has been granted exclusivity by mid May.
Up for grabs is Fonterra’s ice cream business Tip Top, which is a victim of a wider ranging portfolio review at the Kiwi dairy giant. It’s likely to be worth about $250 million to $300 million.
Bidders include Australia’s BGH Capital, Mercury Capital and Pacific Equity Partners, and PAI’s R&R.
Fonterra bought the business in 2001 and it has previously been owned by Australian businesses including Peters (now owned by R&R) and Brownes.
Private equity bidders were lured to the auction by the prospect of picking up an orphan business unit from a corporate giant like Fonterra.
Tip Top has a long history in New Zealand and an iconic brand in its own right, and the private equiteers reckon it could flourish again with attention and fresh capital.
An information memorandum sent to prospective acquirers put Tip Top’s net sales at about $NZ150 million this year, with earnings before interest, tax, depreciation and amortisation pegged at $NZ20 million to $NZ25 million.
Earnings are expected to go up next year, with tyre-kickers told to expect about $NZ30 million at the EBITDA line.