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Is the reign of cost-slashing private equity over in the food industry?

January 7, 2022, 4:10 PM UTC

Hi, Term Sheeters. Happy Friday!

I want to circle back to an acquisition that got a little lost given the Crystal Ball edition and Elizabeth Holmes trial.

3g Capital—after a near-seven-year hiatus from major dealmaking—announced it was back at it with a $7.1 billion deal for Hunter Douglas, a Netherlands-based window shutters company. 3g purchased a 75% stake of the holding company.

That deal is large. It’s also a far cry from what you may have expected from 3g. The private equity firm made a name for itself as a cost-cutting buyout firm in the food and beverage business. Think layoffs, new budgets, and executive replacements at companies like Heinz (later Kraft Heinz after the major acquisition) or Anheuser-Busch InBev SA, the brewing company behind Budweiser and Corona. Popeye’s, Burger King, and Tim Horton’s all fall under Restaurant Brands International, which is owned by 3g. The firm has historically been known for using “zero-base budgeting” to obtain rigid efficiency, where managers have to justify expenses every single year, rather than rely on historic metrics. 

The “ZBB” method seemed to have run out of steam (though it appears to have made somewhat of a comeback during the pandemic). 3g, too, began running out of steam, as the Wall Street Journal reported at the end of 2019: The firm was intently focused on saving, and less so on investing in innovation for new products. That was taking a toll on sales as consumers began favoring organic and natural ingredients above historical loyalties to a given label. After all, there are only so many costs to hack away at. “I’m a terrified dinosaur,” 3G co-founder Jorge Paulo Lemann said at the Milken Institute conference in April 2018, according to the Journal. The firm was “being disrupted in all ways.” 

In January 2017, 3g was on track to “eat the food industry.” Now, has it opted to move on? All that being said, I just wanted to disclose that I do, indeed, have a bottle of Heinz ketchup in my fridge, in case anyone was wondering. 

See you Monday,

Jessica Mathews
Twitter: @jessicakmathews
Email: jessica.mathews@fortune.com

VENTURE DEALS

- Silicon Ranch Corporation, a Nashville-based independent renewable energy producer, raised $775 million led by Manulife Investment Management and was joined by investors including Shell, TD Greystone Infrastructure Fund, and Mountain Group Partners.

- Alumis, formerly known as Esker Therapeutics, a San Francisco-based precision immunology company backed by Foresite Capital, raised $200 million in Series B funding led by AyurMaya.

- RoadRunner Recycling, a Pittsburgh, Penn.-based sustainable waste management company, raised $70  million in Series D funding led by General Atlantic’s BeyondNetZero.

PRIVATE EQUITY

- Sumeru Equity Partners invested $70 million in iProov, a London-based online biometric face authentication company.

- BV Investment Partners acquired Marlabs, a Piscataway, N.J.-based information technology and knowledge process outsourcing (KPO) services provider. Financial terms were not disclosed.

- CES Power, backed by Allied Industrial Partners, acquired Production Power & Air, a Fort Lauderdale, Fla.-based power generation and temperature control services company. Financial terms were not disclosed.

- Clearview Capital acquired Outdoor Edge Cutlery, a Denver, Colo.-based knife, butcher kit, and accessory retailer under Revo Brands. Financial terms were not disclosed.

- FloWorks, backed by Clearlake Capital, acquired SemiTorr Group, a Tualatin, Oreg.-based specialty fluid handling systems and components distributor. Financial terms were not disclosed.

- Hunter Point Capital acquired a minority stake in Iron Park Capital, a New York-based credit hedge fund manager. Financial terms were not disclosed.

- Ivy Fertility, backed by InTandem Capital Partners, acquired Pacific NW Fertility and IVF Specialists, a Seattle, Wash.-based reproductive center and donor egg bank.

- Monomoy Capital Partners acquired Cast-Crete Holdings, a Seffner, Fla.-based precast and prestressed concrete lintels and sills manufacturer and distributor. Financial terms were not disclosed.

- NCK Capital recapitalized English Riding Supply, a Scranton, Penn.-based company that markets and distributes English-style equestrian equipment and products for both horse and rider. Financial terms were not disclosed.

- Norland Capital invested in iWorQ Systems, a Logan, Utah-based provider of business critical workflow and asset management software for local cities and counties. Financial terms were not disclosed

- Percheron Capital acquired a majority stake in Animal Dermatology Group, an Irvine, Calif.-based veterinary dermatology specialist group. As part of the deal, ADG acquired Animal Dermatology and Allergy Specialists, a New York-based veterinary dermatology specialty practice. Financial terms were not disclosed.  

- Pfingsten acquired Fairbank Equipment, a Wichita, Kansas-based agricultural and propane parts, components, and equipment distributor. Financial terms were not disclosed.

 - Rainier Partners acquired a majority stake in Wilmar Corporation and its subsidiaries, a Kent, Wash.-based supplier, distributor and category manager of tools and equipment to the automotive aftermarket. Financial terms were not disclosed.

- Rotunda Capital Partners acquired a majority stake in Siegel Egg, a wholesale distributor of bakery ingredients and other food products in New England and New York.

- Wheel Pros, backed by Clearlake Capital Group, acquired throtl, a San Diego, Calif.-based aftermarket e-commerce platform for automotive and off-roading enthusiasts. Financial terms were not disclosed.

- WilliamsMarston, an Align Capital Partners portfolio company, acquired Bay Valuation Advisors, an Oakland, Calif.-based valuation advisory services company. Financial terms were not disclosed.

EXITS

- BPOC and Five Arrows Capital acquired basys, a Baltimore, Md.-based specialized business administration software company for the Taft-Hartley community, from WindRose Health Investors. As part of the deal, basys merged with Innovative Software Solutions. Harbour Benefits Holdings, which formerly owned Innovative Software Solutions, retains an investment in the combined entity. Financial terms were not disclosed.

- One Equity Partners acquired a majority stake in Rosboro, a Springfield, Oreg.-based glued laminated timber manufacturer, from Wynnchurch Capital. Financial terms were not disclosed.

OTHER

- The New York Times agreed to acquire The Athletic, a San Francisco-based sports in-depth sports coverage media company, for $550 million in cash.

- Matterport agreed to acquire Enview, a 3D geospatial data processing company, for approximately $95 million in cash and stock.

- JLL acquired Hank, a Sacramento, Calif.-based virtual engineering and HVAC programming platform for commercial buildings. Financial terms were not disclosed.

Quickbase acquired MCF Technology Solutions, a Lorain, Ohio-based extension software developer for retail, construction, manufacturing, and utility industries. Financial terms were not disclosed.

IPOS 

- CinCor Pharma, a Boston, Mass.-based hypertension and other cardio-renal disease treatment development company, raised $193.6 million in an offering of 12.1 million shares priced at $16 per share—it had previously planned to sell 11 million shares. The company reported a net loss of $21 million in the nine months ending in Sep. 2021 and has yet to post revenue. Sofinnova, 5AM Ventures, CinRx Pharma, and General Atlantic back the firm.

- Amylyx Pharmaceuticals, a Cambridge, Mass.-based amyotrophic lateral sclerosis therapy development company, raised $190 million in an offering of 10 million shares priced at $19 per share—it had previously planned to raise up to $175 million. The company reported a net loss of $59.6 million in the nine months ending Sep. 2021 and has yet to post product sales revenue.  Morningside, ALS Investment Fund, and Viking Global back the firm.

- Vigil Neuroscience, a Cambridge, Mass.-based therapeutic development company for neurodegenerative diseases, raised $98 million in an offering of 7 million shares priced at $14 per share—it had previously planned to price shares at up to $17. The company reported a net loss and comprehensive loss of $30.3 million in the nine months ending in Sep. 2021. Vigil has yet to post revenue. Atlas Venture, Northpond Ventures, Vida Ventures, and Amgen back the firm.

SPAC

- Carousell, a Singapore-based online classifieds marketplace operator, is in talks to go public via a merger with L Catterton Asia Acquisition Corp., a SPAC, according to Bloomberg. A deal could value the firm at $1.5 billion.

- Averda, a Dubai-based waste-disposal services company, is in talks to go public via a merger with Better World Acquisition Corp., a SPAC, per Bloomberg.

FUNDS + FUNDS OF FUNDS

- Khosla Ventures, a Menlo Park, Calif.-based venture capital firm, raised $550 million for a new fund for later-stage investments. 

PEOPLE

- Flexpoint Ford, a Chicago, Ill.-based private equity firm specializing in the financial services and healthcare industries, promoted Chris Ackerman to managing partner from managing director.

- Great Hill Partners, a Boston-based private equity firm, today promoted Craig Byrnes to managing director and Chris Govey to principal. 

- GV, Alphabet’s Mountain View, Calif.-based venture capital firm, hired Cathy Friedman and Scott Biller as executive venture partners. Formerly, they were with Morgan Stanley and Agios Pharmaceuticals, respectively.

- J.F. Lehman & Company, a New York-based middle-market private equity firm focused on aerospace, defense, maritime, government, and environmental sectors, promoted David Thomas to managing director, and R. Benjamin Hatcher and Kevin Vallès to principal. The firm also hired Alec Schmidt as vice president from Rubicon Technology Partners.

- LocalGlobe, a London-based venture capital firm, promoted Emma Philips, Rose McCourt, Tom Lambert, Ferdi Sigona, Rhian Saleh, and Ziv Reichert to partners.

- The Rohatyn Group, a New York-based asset management and private equity firm, promoted Colin Clark and Erik Kankainen to partners. 

- Vestar Capital Partners, a New York-based middle-market private equity firm, promoted Jake Olson, Diya Talwar, and Mike Vaupen to managing directors.

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