£120m deal leaves sweet taste for Tangerine backers

private equity firm Growth Capital Partners realised a stellar return on its 2005 investment in confectionery manufacturer Tangerine yesterday after US buyout giant Blackstone took a majority stake in a deal believed to be worth £120m.

The new backing creates a platform for the Blackpool-based business to further consolidate its position in a market hit hard by soaring commodity inflation.

Tangerine has been able to pass on the rising cost of raw materials to the big retailers because of the strength of its brands, including Butterkist, Sherbet Dib Dabs and Fountains.

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There are between six to 12 smaller players in the confectionary sector who have been less able to pass on their costs.

These are potential targets for Tangerine, which operates from eight sites.

The group bought Monkhill from Cadbury in 2008 and has focused on increasing efficiency within operations, while maintaining investment in new product development.

Steven Joseph, chairman of Tangerine, said: “Since 2005 we have worked closely with GCP and with their support and flexible funding approach, we have been able to grow Tangerine significantly organically and through acquisition.

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“We are looking forward to working with Blackstone who will help us to take the business to the next level of growth.”

Tangerine has 600 employees in Yorkshire at sites in Pontefract and Cleckheaton.

Garrett Curran, partner with GCP, said: “In just five years Tangerine has enjoyed stunning growth.

“It has quadrupled in size and consolidated its position as the UK’s largest independent private label sugar confectionery manufacturer, increasing the range of brands that it owns and the number of food retailers for whom it manufactures own brand products.

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“This is a credit to its first rate management team and an endorsement of our approach to investing across the capital structure and in ambitious entrepreneurs.

“Tangerine still has enormous potential and we wish the management every success in their next stage of growth.”

A spokeswoman for Blackstone declined to comment.

The US private equity firm has invested in 150 businesses in the last 25 years, including companies such as United Biscuits and Merlin Entertainment.

Mr Joseph said: “They are very supportive of our business strategy in these challenging economic times and so it will be ‘business as usual’ within Tangerine.”

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Chris Stott, a partner at KPMG in Leeds who advised the company, said: “Blackstone’s investment in Tangerine is a timely reminder that private equity is still there for defensible growth businesses with strong management teams.”

He added: “A key part of our role was showcasing the impressive growth track record and extensive future growth opportunities.”