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Pet food manufacturer Alphia will become a platform for making acquisitions under its new owner, PAI Partners, says PAI partner Winston Song.

Why it matters: Brands and private label retailers need supply chain solutions and additional pet food manufacturing capacity, he tells Axios.

Details: Denver-based Alphia will begin its hunt for targets as soon as the deal closes this fall.

It will eye buys within the supply chain, including in ingredients, other co-manufacturers, and capabilities that can add something new to the platform, Song says.

The firm also sees opportunities to add geographies, he says, with the potential to look at brands as well.

Alphia has a management team that can play across all aspects of the value chain for pet food, Song adds.

Between the lines: PAI knows the co-manufacturing space well, having invested in bottler Refresco, which allows the PE firm to play across the beverage ecosystem, says Maud Brown, a partner at PAI, who heads up its U.S. team.

Refresco provided a view into the beverage space, which helped PAI to develop an intelligent approach to the acquisition of Tropicana, Brown explains.

Similarly, Alphia gives PAI insights into what's happening in the category, in terms of trends, brands, and products that it can leverage as it deploys capital.

Catch up fast: PAI agreed to acquire Alphia from PE firm J.H. Whitney Capital Partners in late August for an enterprise value of about $1 billion, per Reuters.

The deal is being financed with a mix of syndicated loans and a generous amount of equity, though PAI declined to comment on that aspect.

What attracted PAI to Alphia was its manufacturing capacity and its national footprint, Song says.

It can also handle a lot of complexity and novelty in super premium kibble in addition to value-tier kibble, he says.

Plus, Alphia has a diverse customer pool, Brown says.

The big picture: "It's a good way for us to continue building our presence here in North America," says Brown.

This is an industry and asset the firm had been following before the auction process, she says.

Of note: Paris-based PAI's other big bet on this side of the pond includes beverage maker Tropicana Brands Group.

What they're saying: Song noted major trends toward premiumization and humanization, as well as other temperature states, such as fresh, frozen and freeze-dried.

The co-manufacturing side will benefit from the 60 to 70 new pet food brands launched each year and the products introduced by the big brands to keep pace with the startups, he says.

The bottom line: "As we build the PAI platform in North America, we are marrying our core strengths and capabilities institutionally and translating those into the U.S. market," Brown says.

Pet food manufacturer Alphia to sniff out acquisitions

The company will begin its hunt for targets as soon as the deal closes this fall.

Illustration of a bowl of pet food with a knife and fork on either side

Mergers and acquisitions

Pet food manufacturer <a class="gtmContentClick" data-vars-link-text="Alphia will become a platform" data-vars-click-url="https://www.paipartners.com/mediaitem/pai-partners-to-acquire-alphia/" data-vars-content-id="0dff7baf-adcc-4d61-b141-a8fd2cd621aa" data-vars-headline="Pet food manufacturer Alphia to sniff out acquisitions" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.paipartners.com/mediaitem/pai-partners-to-acquire-alphia/" target="_blank">Alphia will become a platform</a> for making acquisitions under <a class="gtmContentClick" data-vars-link-text="its new owner, PAI Partners" data-vars-click-url="https://www.axios.com/2023/04/24/nestle-pizza-pai-partners" data-vars-content-id="0dff7baf-adcc-4d61-b141-a8fd2cd621aa" data-vars-headline="Pet food manufacturer Alphia to sniff out acquisitions" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.axios.com/2023/04/24/nestle-pizza-pai-partners" target="_self">its new owner, PAI Partners</a>, says PAI partner Winston Song.Why it matters: Brands and private label retailers need supply chain solutions and additional pet food manufacturing capacity, he tells Axios.

Pet food manufacturer Alphia to sniff out acquisitions

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