UPDATE 4-Lion to buy Picard in biggest French LBO since 2008

* Lion steals march on Bain, CVC, LBO France

* Bid said likely to value firm at about 1.5 bln euros

* Permira pipped Lion to buy Findus Italy a week earlier

(Adds comments from Lion partner)

By Quentin Webb and Victoria Howley

LONDON, July 26 (BestGrowthStock) – BC Partners [BCPRT.UL] agreed to
sell French frozen-food firm Picard Surgeles to rival Lion
Capital, highlighting the keen appetite of private equity firms
to strike deals in the recession-resilient food industry.

The sale of Picard, which has thrived by persuading France’s
fastidious consumers that convenience food can be high-quality,
is the country’s biggest leveraged buyout (LBO) since the
September 2008 collapse of Lehman Brothers.

Lyndon Lea, a partner who led the purchase for Lion, said
the firm was keen to acquire a business with “resilience and
stability” that was a household name in France.
Lion will seek to grow the business by opening perhaps 200
to 300 more stores in France and by investing to improve areas
such as merchandising and the supply chain, Lea said.

In a joint statement on Monday, which contained no financial
details, the firms said Lion would begin talks with employee
representatives this week ahead of a formal agreement and the
transaction was likely to complete in the fourth quarter.

Three people familiar with the matter said the deal placed
an enterprise value of about 1.5 billion euros ($1.9 billion) on
Picard. BC would make roughly double its initial equity
investment, one of the people said.

Two of the people said Lion made a pre-emptive bid over the
weekend to head off rivals Bain Capital, CVC [CVC.UL], and LBO
France, who were also preparing binding bids for the company.
The other private equity firms either declined to comment or had
no immediate comment.

Clive Black, head of research at brokerage Shore Capital,
said buyout funds prized the relatively dependable cashflows of
companies selling consumer staples such as food, drink,
cigarettes and household products.

“The attractiveness of consumer staples has become more
apparent recently, given the collapse of growth sectors like
commercial property that find capital hard to get hold of,”
Black said.
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Related Dealtalk [ID:nLDE6611IP]

Story on credit investors rattled [ID:nLDE66P0O9]

Factbox on European LBOs [ID:nLDE66P0SA]

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YOGHURT AND BISCUITS

Buyout firms are lining up several other food deals.
Blackstone and PAI Partners are considering selling United
Biscuits for at least 2 billion pounds and PAI says it is open
to offers for its half stake in Yoplait, the yoghurt maker.
[ID:nLDE66K18C] [ID:nLDE66K0FP]

Lion, a specialist investor in consumer industry companies
such as lingerie firm La Senza and cereal-maker Weetabix, would
become the third successive private equity firm to own Picard.

The offer comes a week after it lost out in the race to
acquire Unilever Plc/NV’s (ULVR.L: ) (UNc.AS: ) Italian frozen-foods
unit, Findus Italy. Instead, Birds Eye Iglo, a unit of rival
buyout house Permira [PERM.UL], bought Findus Italy for 805
million euros. [ID:nLDE66I0KH]

Picard runs more than 800 stores in France and generated
1.15 billion euros in revenue last year. Earlier this month,
bankers told Thomson Reuters Loan Pricing Corp (TRLPC) that
Picard has earnings before interest, tax, depreciation and
amortisation (EBITDA) of about 160 million euros.

VIBRANT STREET MARKETS

France, with its prized reputation for fine cuisine and
vibrant street markets selling fresh fish, meat, fruit and
vegetables, may not seem an obvious place to sell frozen food.

Television shows decry the use of frozen ingredients in
restaurants and France has often looked down on countries such
as Britain where convenience food is commonplace.

But Picard stores are found throughout Paris and are even
sometimes highlighted by estate agents among a property’s local
amenities.

Unlike rivals, Picard offers high-end meals and ingredients,
rather than focusing on low prices. Its products include rooster
in a cream sauce with truffles and wine from the Jura region for
23.95 euros, a box of 20 petits fours, savoury pre-dinner
snacks, for 7.70 euros and a dozen macaroons for 4.95 euros.

The business has been owned by private equity for nearly a
decade. Candover (CDI.L: ) led a 2001 buyout from majority owner
Carrefour SA (CARR.PA: ), and three years later BC took over in a
deal that valued Picard at 1.3 billion euros.

The sale is a boon for BC, which sources familiar with the
matter said in May was seeking to raise a new 5.9 billion euro
fund, one of the year’s most eagerly awaited. [ID:nLDE64A27E]

Rothschild [ROT.UL] and lawyers from Cleary Gottlieb Steen &
Hamilton advised BC. Citigroup and SJ Berwin advised Lion.
Credit Suisse, Citi and Morgan Stanley provided financing.

The deal is backed by senior leveraged loans, some of which
will be repaid by high-yield bonds later in the year, a person
familiar with the matter told Thomson Reuters LPC.

It is France’s largest LBO since the June 2008 buyout of
Converteam Group SAS, a power conversion company, by LBO France,
Thomson Reuters data shows.

Stock Market Research

(Additional reporting by Zaida Espana in London with James
Regan and Julien Ponthus in Paris; Editing by Steve Slater and
David Holmes)
($1=.7746 euros)

UPDATE 4-Lion to buy Picard in biggest French LBO since 2008