Sale of minority shareholding
Background to the Role
Hubbards Foods is a major Australasian cereal company. At the time Cranleigh was engaged to sell the company, the vendors (Dick and Dianne Hubbard) had been
disengaged from the business due to Dick's heavy commitments as Mayor of Auckland. Cranleigh led and managed the sale process, resulting in a range of international
parties (including US and Australian parties) expressing an interest and bidding for the business. As a result of gaining a much better appreciation of the business through observing management presentations and being more engaged in the business, Dick and Dianne Hubbard eventually decided to retain the majority of the business with only 35% of the company to be sold. This decision came against the backdrop of significant bids from interested parties.
The Business Need
Notwithstanding its success, it become apparent at a later stage that Hubbards Foods required additional working capital to fund further expansion of operations. As the vendors had a strong philanthropic focus (rather than just commercial aspirations) it was necessary to identify a party with a similar investment philosophy. The required investor had to be a community organisation with a long-term investment focus, which consequently meant that the potential investor pool was very limited.
The Cranleigh Solution
Over the subsequent 12 months, Cranleigh considered various parties in a low-key manner who could be appropriate investors. This led to the identification of the Rotorua Energy Charitable Trust, a community-based charitable trust that was prepared to invest long-term and consider alternative funding mechanisms that were compatible for both shareholders.
Cranleigh designed an appropriate sales strategy to ensure that, even though there was only one party in the equity raising, it did not compromise the value expectations of the vendors.
Cranleigh subsequently managed the sell-down of a minority interest on a non-competitive basis. This led to a successful long-term partnering between the two entities.