Chinese eye Independent Liquor

Private equity firms Unitas and Pacific Equity Partners (PEP) are looking to sell a stake in New Zealand beverages group Independent Liquor, sources said on Thursday, with China's Bright Food Group Co said to be among the suitors.

Japanese drinks giant Suntory, owner of New Zealand 'V' maker Frucor Beverages, is also said to be in the frame.

The sources were not able to confirm the size of the sale.

Independent Liquor had $414.4 million in revenue last year, but recorded a loss of $22.7 million. It had bank borrowings of $693 million, according to filings.

Sources said PEP and Unitas were "testing the waters" and were also open to a full exit, although it was early days for the deal.

Based on Reuters calculations, the company had about $95 million in EBITDA (earnings before interest, tax, depreciation and amortisation) and applying a 10-12 times multiple would give the company an enterprise value of about $1 billion.

PEP and Unitas, which acquired Independent Liquor in 2006 for $1.26 billion, have hired UBS in Sydney to find strategic partners to sell their stakes in the business, the sources said. The sources had direct knowledge of the auction but were not authorised to speak publicly on the matter.

A Bright Food spokesman declined comment. UBS was not available for comment.

Bright Food, a Shanghai-based food and dairy company, has shown interest in buying overseas assets. Last year it bought a majority stake in South Island dairy processor Synlait for $82m.

It said last month that it was determined to expand abroad through acquisitions. Bright Food is planning to raise about US$916 million by selling bonds and listing a unit.

Independent Liquor, whose products include Woodstock Bourbon and Vodka Cruiser, has plans to expand into the United States and China.

PEP declined comment, while Unitas was not immediately available.

One source said Japanese companies with a presence in Australia could also be interested in the process.

Japanese brewers Asahi Breweries and Kirin Holdings, have been expanding in Australia. But Asahi's attempt to buy soft drink maker P&N Beverages for US$364 million was blocked by the Australian regulator.

An industry source said that Lion, the Australia and New Zealand beer, spirits, wines and dairy business owned by Kirin, would be unlikely to look at Independent Liquor as Kirin was focused on brands.

Australia's top grocer Woolworths, has previously been seen as a potential bidder, but the industry source said that it would be hard for Woolworths to justify buying Independent Liquor as the business brews private label beer for Woolworths as well as its competitors.

Unitas is a buyout group formerly known as CCMP. That group spun out of JP Morgan when the bank decided to hive off its private equity arm.

Pacific Equity Partners is a buyout fund focused on investments in Australia and New Zealand.