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. Last Updated: 07/27/2016

British Firm Buys No.3 Juice Maker

London-based private equity group Lion Capital has agreed to buy Russia's third-largest fruit juice maker, Nidan Soki, both sides said Monday, announcing what they called the first leveraged buyout deal in the country.

Privately held Nidan had sales of $270 million in its last financial year, and although financial details were not disclosed, one source familiar with the transaction said similar deals had been priced at around two times sales.

"It's the first western-style LBO in Russia," the source said. "It's a market where we thought this would happen sooner or later."

The deal's backers said LBOs could offer a new route for Russian company owners to cash out of their businesses, in addition to stock market offerings that have boomed in recent years.

Analysts estimate that Russian companies will this year raise upward of $36 billion through floating in Moscow and abroad -- primarily in London. That would be a record and more than twice last year's proceeds.

The Nidan transaction is scheduled to close in September and is subject to the approval of the Federal Anti-Monopoly Service.

"The transaction is a leveraged buyout of 100 percent of Nidan," said Maxim Arefiyev, executive director at the investment and banking department of Troika Dialog.

Troika Dialog advised Nidan's shareholders, the largest of whom is board chairman Igor Shilov, on the deal. Lion Capital was advised by Goldman Sachs, which also put together financing to back the deal.

Some 30 percent to 35 percent of the total deal will be covered by its equity sponsors, and the rest through a debt package that includes payment-in-kind notes, where the borrower issues new debt if it cannot meet interest payments, the source said.

Such LBO structures have come under pressure in the West recently, as credit market conditions have deteriorated. But the deal's arrangers are confident of syndicating the debt financing for the Nidan deal in six to eight weeks.

Nidan, which produces Moya Semya fruit juices, is unlisted, but it said in November 2006 that it could list up to 49 percent of its shares in Moscow in the spring or fall of 2007. It competes with the country's largest juice producer Lebedyansky and leading fruit juice and dairy group Wimm-Bill-Dann.

"We believe that we have an excellent chance to repeat the strong financial results of Nidan Soki by introducing new products, expanding our presence in the market and investing into development of the company's brands," Javier Ferran, a partner of Lion Capital, said in a statement.

Lion Capital, founded in 2004, has already made 10 capital investments in the consumer sector, buying household names such as French soft drinks firm Orangina, British breakfast cereal maker Weetabix and snack foods firm Kettle Foods.