Nomad Foods has purchased Iglo, owner of the iconic Birds Eye frozen food brand marketed in the European Union, from the private equity firm Permira for EUR 2.6 billion (£1.9 billion). Not part of the transaction is the Birds Eye brand in the United States, which is a unit of Parsippany, New Jersey-headquartered Pinnacle Foods.
Permira, which acquired Birds Eye and Iglo from Unilever in 2006 for EUR 1.7 billion, tried to sell the company in 2012 without success after rejecting offers that came in below the asking price. The deal with Nomad Foods reportedly leaves Permira with 9% ownership of the company.
Listed on the London Stock Exchange, Nomad Foods was established last year by US tycoons Noam Gottesman and Martin E. Franklin, whose consumer goods business is capitalized at approximately $10 billion (£6.7 billion). The price paid for Iglo was said to be 8.5 times the company’s earnings before interest, taxes, depreciation and amortization.
“We took a highly disciplined approach to evaluating opportunities for Nomad’s initial investment. During this process it was abundantly clear that Iglo was a natural fit. This is a well-run business that has cemented itself as a leader in an attractive yet highly fragmented sector,” said Franklin, who grew up in Britain and is the son of Sir Roland Franklin.
Gottesman is a former hedge fund manager and chief executive of Toms Capital, an investment firm that backs Nomad Foods.
Iglo is active in manufacturing and providing consumers with a large variety of frozen products in retail channels, including ready meals, potato and vegetable items, baked good and desserts. Among its well known Birds Eye’s seafood offerings are Crispy Fish Bites and Fish Fingers, Haddock Fillets in Harry Ramsden Batter, Omega 3 Fish Fillet Burgers and Lightly Dusted Cod Fillets.
The Iglo Group, headquartered in Feltham, England, has 2,800 employees and operates factories in the UK, Germany and Italy. On February 26 it reported a 1.9% drop in net sales during 2014. This was mainly due to declines in two major markets, the United Kingdom and Germany. However the company, whose iconic frozen food brands include Birds Eye (in the UK) and Findus (in Italy) as well as Iglo (in Germany, Austria, Holland and other countries), scored positively on a constant currency basis in eight of 12 European markets, highlighted by a 2.1% gain in Italy.
“Against a backdrop of difficult economic and tough retail conditions across Europe [where the frozen food category declined by 0.5% last year], our Better Meals Together strategy is starting to deliver some positive results. We have started to build momentum in a number of markets…driven by our new innovative platforms, such as Steamfresh,” said Iglo Group CEO Elio Leoni Sceti. “Italy, where we launched our strategy first, has now delivered five successive quarters of net sales growth.”
In February Leoni Sceti announced that a cash conversion level of 90% over the previous 12 months enabled the company to reduce net debt by EUR 100 million year on year. Total sales in 2014 amounted to €1.466 billion. Compared with 2013, Iglo brand sales fell by 2.81%to EUR 521.9 million, while Birds Eye revenues were relatively flat at EUR 5.1.7 million. Findus Italy achieved turnover of EUR 428.2 million.
“Despite a disappointing decline in overall sales, we have been able to boost new product development, expand our gross margin by 180 basis points and invest in our strategy, launching new innovation platforms and increasing advertising and promotions spending to support our Food of Life media campaign,” said the ceo.
Leoni Sceti, who is expected to relinquish his executive position in June, will reportedly remain on the board as a non-executive director.
