Nestle To Buy Sweet Leaf From Catterton Partners

According to a press release posted on Fox Business, Nestle is buying Sweet Leaf:

After three years, Catterton Partners has finally quenched its thirst for iced tea.

The consumer-focused private equity firm is selling Sweet Leaf Tea Co. to Nestle SA’s (NSRGY, NESN.VX) Nestle Waters North America Inc., which had been an investor and partner for over two years.

The Austin-based company had brought its revenue to $53 million in 2010 from under $10 million when Catterton first got involved back in 2008, investing $18 million. Freestone Partners LLC was an earlier backer, investing in Sweet Leaf in 2006 and 2007.
Catterton declined to disclose deal details. Nestle and Freestone executives could not immediately be reached by press time.

Before Nestle got on board, Catterton worked with the founders on creating a new bottle, standardizing distribution agreements and optimizing its production networks, according to Catterton Partner Michael Farello.

“What excited us was the thought that we could scale this business on a national level,” Farello said. “It was performing extraordinarily well against both natural and mainstream brands, and what it really needed was the distribution and marketing muscle to expand nationally.”

In April 2009 Nestle signed on, investing $15.6 million. At the time of the deal, Sweet Leaf’s founder, Clayton Christopher, said Nestle would have an option to buy the company within three years at a preset price.

Sweet Leaf then bought Tradewinds Tea to complement the business in the multi-pack, mass distribution arena. In May 2010, investors funneled another $19.1 million in financing to the company.

Nestle and Catterton each held two board seats, with Freestone, the founder and the chief executive holding one each. Silicon Valley Bank and Texas CAPCO Program, a state program funding Texas businesses, provided financing over the years.

The deal was the first investment and first exit from Catterton’s growth fund, Catterton Growth Partners LP, which closed at $300 million in 2008 and is roughly half invested.

The firm has done seven other investments of the corporate partnership type over the past four years, Farello said. Coconut water portfolio company O.N.E., or One Natural Experience, may receive the same kind of exit, as it’s “working on a path towards” an eventual takeover by current investor PepsiCo Inc. (PEP), O.N.E. founder Rodrigo Veloso said late last year.

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