Lloyds private equity bid for UK manufacturer in trouble

THE PRIVATE equity arm of taxpayer-owned Lloyds bank has run into trouble in its bid for a family-owned British manufacturer in a deal worth about £70m, City A.M. can reveal.

The family that owns Benson Group, which produces packaging for well-known brands sold in Asda, Tesco and Boots, has been trying to sell out of the company for months and entered exclusive talks with Lloyds Development Capital (LDC) in the spring of this year.

But the talks have dragged on without result and, in a blow for the Leicestershire-based manufacturer, the deal is now believed to be close to collapse, with Benson potentially seeking another buyer.

Over the timeframe of the talks, the cost of finance for the leveraged debt that funds many private equity deals has skyrocketed. LDC’s parent, Lloyds Banking Group, has been hit particularly hard by rising funding costs and was forced to put up the cost of its mortgages recently. It is not known if Lloyds financing was being used for the Benson deal, but the bank provides all of the capital that LDC invests.

Among Benson’s best-known products are the packaging for Neurofen painkillers, Marks & Spencer readymeals and Asda’s “cheeky monkey cake”. The company had an annual turnover of some £90m in 2010.

Lloyds, Benson and LDC declined to comment on the deal.