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PEP sells Griffin's biscuits to Philippines company

A Philippines company, Universal Robina, has bought snack food company Griffin's Foods for $700 million in a private equity trade sale.

Owner Pacific Equity Partners (PEP), which bought Griffin's for $385 million in 2006, says funds controlled by it completed the deal.

Griffin's goes back to the early colonial days when immigrant John Griffin set up a cocoa and flour business in Nelson in 1864.

By 1890, he had expanded into biscuits and sweets. In 1938 it moved its biscuit-making to a new factory in Lower Hutt.

Many of its favourite brands, such as Chocolate Macaroon and Mallowpuffs, followed in the 1950s when it imitated American-style biscuits.

In 1962, Griffin's was acquired by US company Nabisco and in the 1970s it acquired the Sweeacres confectionery company's Minties and Jaffas brands.

Other brand acquisitions followed: the UK's Huntley & Palmers, Eta snacks and spreads, and Nice & Natural (the last bought for $55 million in PEP ownership).

In 1990, Nabisco sold out to Britainnia Foods, which in turn sold Griffin's to Danone, the French dairy multinational.

Another geographic move occurred in when the sweets business was swapped with Cadbury for Hudson biscuits and the Cookie Bear brand, plus a biscuit factory in Papkura, where Griffin's is still based.

In 2011, China's Bright Food Group Co. held talks to buy Griffin's but didn't follow through with a deal.

"We believe Griffin's is a natural strategic fit to our existing snack foods portfolio given its strong brand heritage in New Zealand," says Lance Gokongwei, Universal Robina's chief executive.

The acquisition will allow the company to export Griffin's products throughout Asia to countries including Vietnam, Thailand, Indonesia and China.

The sale comes after accounts for NZ Snack Food Holdings show the Griffin's holding company made a capital return of $192 million in a share repurchase in the same year PEP refinanced the maker of Gingernuts, Mellow Puffs and Huntley & Palmers crackers and Eta brand snacks. The group had interest bearing debt of $442.4 million as at Dec. 31, up from $234.6 million a year earlier, according to financial statements lodged with the Companies Office. The $274.5 million of bank debt matures in January 2016, while $167.9 million of mezzanine notes mature in January 2019.

NZ Snack Foods reported a 75 percent slump in profit to $5.1 million in calendar 2013, as its finance costs climbed by more than half to $23.8 million. Revenue fell 4.3 percent to $280.8 million. Gross margins were largely unchanged at 53 percent. Operational cash inflow more than doubled to $34 million, and the group held cash of $34.8 million as at Dec. 31.

The deal is subject to Overseas Investment Office approval, and ends PEP's eight-year ownership of the snack foods maker. Chief operating officer Alison Taylor will take over as chief executive once the sale if completed.

(With reporting from BusinessDesk)