Lion Capital LLP will use debt financing from lenders led by JPMorgan Chase & Co. to pay for its $980 million leveraged buyout of Bumble Bee Foods LLC, according to a person familiar with the negotiations.
Wells Fargo & Co., Barclays Plc and Jefferies Group Inc. also agreed to help raise money for the transaction, the London- based private-equity firm said today in a statement.
Lion Capital, with investments totaling 19 billion euros ($27 billion) in enterprise value, is buying Bumble Bee from New York-based private-equity firm Centre Partners Management LLC, according to the statement.
The purchase price is about 7.5 times more than the San Diego, California-based company’s earnings before interest, taxes, depreciation and amortization, the person familiar with the talks said. Bumble Bee, North America’s biggest supplier of canned seafood, had $940 million in net revenue last year, according to the statement.
Della Sweetman, a spokeswoman for Bumble Bee, didn’t immediately return a message left at her office seeking comment.
Lion Capital will provide about 35 percent of equity financing for the transaction, the person familiar with the talks said. The balance will be paid with bonds and bank debt, which may include term loans and a revolving credit line, the person said. In a revolving credit facility, money can be borrowed again once it’s repaid; in a term loan, it can’t.
The debt structure is yet to be determined and bonds are expected to make up a bigger portion of it, the person said. The acquisition is expected to be completed by mid-December and marketing of the buyout debt will begin after the borrowings are rated, the person said.
Bumble Bee’s total leverage, or debt to Ebitda, will be about 5.5 times after the LBO, the person said.
Private-equity firms pool money from investors and obtain debt to finance takeovers with the intention of selling the companies later for a profit.