Thomas H. Lee in the lead to buy Two-Bite Brownies owner -sources

Mon Apr 18, 2016 5:53pm EDT
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By Lauren Hirsch and Greg Roumeliotis

April 18 (Reuters) - Private equity firm Thomas H. Lee Partners LP is in advanced talks to acquire Give and Go Prepared Foods Corp, a Canadian maker of thaw-and-serve sweet baked goods such as Two-Bite Brownies, according to people familiar with the matter.

The potential deal illustrates how cash flow-rich companies producing high-calorie confectionaries are still popular with some investment firms, despite the consumer industry's broad move toward healthy eating.

"The consumer today has a split personality. They are increasingly focused on health and wellness, but equally love to splurge on quality indulgences," said Michael Dart, a private equity partner at consulting firm A.T. Kearney who is not involved in the Give and Go Prepared Foods sale process.

OMERS Private Equity, the buyout arm of the Ontario Municipal Employees Retirement System which owns Give and Go Prepared Foods, has granted Thomas H. Lee exclusivity in its negotiations in order to reach a deal, the people said on Monday.

There is no certainty that Thomas H. Lee will successfully conclude its negotiations, the people said. The price Thomas H. Lee was offering could not be learned, but the sources said it was lower than the $800 million that OMERS was previously seeking.

Twinkies maker Hostess Brands LLC had also participated in the auction for Give and Go Prepared Foods, Reuters previously reported.

The sources asked not to be identified because the negotiations are confidential. Thomas H. Lee and Give and Go Prepared Foods declined to comment, while Hostess did not immediately respond to a request for comment.

In addition to Two-Bite miniature baked treats, Give and Go Prepared Foods also sells Kimberly's Bakeshoppe cupcakes. OMERS bought Give and Go Prepared Foods from private equity firm Kilmer Capital Partners in 2007. (Reporting by Lauren Hirsch and Greg Roumeliotis in New York; Editing by Matthew Lewis)