Manna Pro set to trade to Morgan Stanley Private Equity on EBITDA adjusted for pending add-ons

07 December 2017

Morgan Stanley Private Equity is in exclusive talks to acquire animal feed maker Manna Pro, said two sources close to the situation.

 

The potential deal values the business at around USD 330m, one of the sources said. It is being financed with a roughly USD 200m unitranche credit facility, the second source added.

 

The business was marketed on roughly USD 30m in pro forma EBITDA, Debtwire reported in October. Underwritten at that figure, the buyout levers Manna Pro at over 6.5x, with a total enterprise value multiple of 11x.

 

That EBITDA figure is adjusted to include add-on acquisitions that have yet to close, also as reported. The deal is indicative of an increasingly aggressive middle market financing environment in which lenders are receptive to looser covenants and highly adjusted earnings.

 

Average leverage on unitranche deals in 3Q 2017 was 5.21x, according to Debtwire Middle Market's most recent Private Credit Report.

 

Chesterfield, Missouri-based Manna Pro’s core business is making and marketing feed products for animals such as horses, cattle, swine, rabbits, dogs and cats. It sells through authorized dealers throughout the US. Customers are mainly small-scale farmers or companion animal owners.

 

The sale would represent an exit for incumbent sponsor The Carlyle Group, which acquired Manna Pro when it absorbed the portfolio of private equity fund Broad Sky Partners in 2015. Broad Sky had made its initial investment in Manna Pro that same year, backed by Cerberus Business Finance. The company generated roughly USD 10m at the time of that buyout, as reported, but has since served as an add-on platform for its owners.

 

Houlihan Lokey had been advising Manna Pro in the auction.

 

Morgan Stanley and Houlihan declined comment on the situation. Manna Pro and Carlyle did not return calls seeking comment.