Australian baby food company Rafferty’s Garden has been acquired by British consumer products company PZ Cussons Group for $70 million.
The purchase by PZ Cussons comes after the Australian Competition and Consumer Commission stopped a deal between Heinz and Rafferty’s Garden.
PZ Cussons owns a variety of well-known brands stocked in Australia, including Morning Fresh, Radiant, Imperial Leather, Original Source and St Tropez.
PZ Cussons chief executive Alex Kanellis said in a statement the acquisition of Rafferty’s Garden was the addition of another leading brand to its portfolio.
“This leading position, together with an exciting pipeline of new products, provides the platform for further growth within Australia,” she said.
“In addition, PZ Cussons’ distribution in countries such as Indonesia and Thailand, together with our understanding of consumers in those markets through our leading Cussons Baby brand, will enable the geographic expansion of Rafferty’s Garden to be maximised.”
Rafferty’s Garden was originally founded in 2008 by British-born entrepreneur Adrian Pike, but in 2010 it was purchased by Australian private equity company Anacacia Capital.
The business sells a variety of pureed baby foods and it has acquired a market share of approximately 40% of the wet baby food market. The company has also been growing its position in the infant dry and snacks market.
After the ACCC blocked a deal between Rafferty’s Garden and Heinz, ACCC chairman Rod Sims argued in a statement the move would likely have resulted in a lessening of competition.
“We are not satisfied that the power possessed by the major supermarket chains will necessarily constrain prices for consumers or drive innovation. Fierce inter-brand competition is more likely to achieve this,” Sims said.
Under the new deal, PZ Cussons has purchased the entire issued share capital, allowing Anacacia to leave the business entirely, while the management from Rafferty’s is staying on under PZ Cussons.
Rafferty’s Garden managing director Michel Tinkler said in a statement the deal will help the baby food company to expand internationally.
“PZ Cussons is a great fit for our business and we are looking forward to working with them to service our existing stakeholders,” he says.
SmartCompany contacted Rafferty’s Garden, but no one was available to provide further comment prior to publication.
In the 2011/2012 financial year Rafferty’s Garden’s revenue was $37.4 million, with growth expected to be 10% for the 2012/2013 financial year.
According to a report released in July last year by research group TechNavio, the global baby food market is forecast to reach over US$38.7 billion by 2015.
The report found the global market had been witnessing “an increased adoption of organic baby food by consumers,” such as Rafferty’s Garden’s products.
While the industry was tipped to continue to grow over the next three years with the “growing urbanisation” of developing countries, declining birth rates pose a challenge to the market.