Exclusive: Buyout firms eye Yankee Candle in $2 billion deal - sources
Yankee Candle Co Inc has attracted offers from several private equity firms in a sale process that could value the largest scented candle maker in the United States at about $2 billion, people familiar with the matter said.
Bain Capital LLC, Advent International Corp, CVC Capital Partners Ltd , Clayton, Dubilier & Rice LLC and Ares Management LLC have made it through the first round of bidding and are set to meet with Yankee Candle's management over the next few weeks, the sources said.
Madison Dearborn Partners LLC , another buyout firm, acquired Yankee Candle in 2006 for $1.6 billion.
The candle manufacturer may be worth 10 times its earnings before interest, tax, depreciation and amortization (EBITDA) of around $200 million, the sources said, speaking on condition of anonymity because the matter is confidential.
Madison Dearborn, Bain Capital, Advent, CVC and Ares declined to comment. Yankee Candle and CD&R did not respond to requests for comment.
Founded in 1969, Yankee Candle sells items including scented candles, home fragrance products, car fresheners and candle accessories.
The South Deerfield, Massachusetts-based company sells its candles in North America through 569 company-owned and operated retail stores, a wholesale network of about 27,800 store locations, as well as online and through its catalog.
Fitch Ratings said in January that Yankee Candle's relatively flat financial performance had constrained its ability to lighten its heavy debt load.
Yankee Candle generated net income of $56.3 million for fiscal 2012, up from $54.5 million in the prior year. It had long-term debt of $846 million and just $40 million in cash as of the end of 2012, according to earnings published on February 28.
In its meetings with the candle maker's management, Bain Capital will come across an old acquaintance.
Yankee Candle's chief executive, Harlan Kent, who last year appeared on the U.S. reality TV show 'Undercover Boss' as a Yankee Candle employee in disguise, began his career in the mid-1980s at Bain & Co, the consulting firm whose partners, including former U.S. presidential candidate Mitt Romney, founded private equity firm Bain Capital in 1984.
Kent later worked for Bain Capital from 1997 to 2001 as senior vice president of global wholesale for umbrella maker Totes Isotoner Corp, which at the time was a Bain Capital portfolio company. He joined Yankee Candle in 2001 as senior vice president of the wholesale division and rose through the ranks to become CEO in 2009.
Chicago-based Madison Dearborn is currently also preparing another portfolio company for a sale. Technology products retailer CDW Corp, taken private by Madison Dearborn and Providence Equity Partners Inc for $7.3 billion in 2007, registered with U.S. regulators on March 22 for an initial public offering.
Madison Dearborn hired Barclays Capital and Bank of America Merrill Lynch to explore a sale of Yankee Candle, people familiar with the matter told Reuters last month.
(Reporting by Greg Roumeliotis in Boston and Soyoung Kim and Olivia Oran in New York; editing by John Wallace)