Bumble Bee Sale Grosses Centre Partners $225 Mioff

Centre Partners Management LLC has sold its last 10% of Connors Bros. Income Fund, a deal which allowed Centre to exit Bumble Bee Seafoods LP at an overall return of 8.5 times its original investment.

Connors Bros. Income Fund is an unincorporated open-ended trust based in Black Harbors, New Brunswick that indirectly owns the San Diego-based tuna processor. Centre's stake in the company was sold through a block trade of Connors’ units. The sale of Bumble Bee brought Centre Partners’ total gross proceeds from the company to $225 million, 8.5 times its initial $26.5 million investment two years ago, said Scott Perekslis, managing director of the New York-based private equity shop.

Centre Partners did not use an outside financial adviser on the sale. It took counsel from Mark Thierfelder of O'Melveny & Myers LLP, the same firm that represented it in its original buyout of Bumble Bee.

Centre Partners originally purchased the seafood company from ConAgra Foods Inc. in May 2003 in a deal valued at $182 million, including debt, Perekslis said. The firm teamed with Bumble Bee’s senior management in the transaction, which gave Centre Partners a fully diluted, two-thirds stake in the company, he said.

In April 2004, Centre Partners merged Bumble Bee with Connors Bros. Income Fund, a deal that valued the company at about $385 million, Perekslis said. The merger created the largest branded seafood company in North America, he added, and left Centre a stake of about 20% in the combined company.

By then the company offered a full line of canned seafood, including tuna, salmon, sardine and clams. The products sold under some of the best-known brand names in their sector, including Bumble Bee, Brunswick, Beach Cliff and Clover Leaf. The transaction also turned Connors into the biggest consumer-products income fund in Canada, Centre Partners said.

Before the acquisition, the U.S. Department of Justice had voiced antitrust concerns, which were dropped when Connors agreed to divest a sardine business. Without that sale, the department worried the purchase of Bumble Bee would have created a near monopoly in sardine snack products.

Within two months, the merger had boosted Connors’ annual dividend to C$1.40 ($1.14) from C$1.35, Centre Partners said.

Pro forma sales for 2004 for the company under Connors Bros. were $840 million, compared with $500 million in sales for Bumble Bee Seafoods for 2003, when Centre entered the picture.

In September 2004, Centre Partners completed a secondary offering of Connors units, selling roughly half its equity stake.

“We sold about half our position in September of last year,” Perekslis said, adding “that generated $57.5 million of proceeds for Centre.”

The sale also reduced its Bumble Bee ownership to about 10%.

Bumble Bee increased its distribution in January when Connors bought canned-clam company Castleberry/Snow's Brands Inc. and Sara Lee Corp.'s shelf-stable meats business, Perekslis said, driving up its yearly dividend even higher to C$1.50.

Centre, invests in middle market companies; it is with its fourth fund, which has $780 million of capital.