Nomad Foods on September 30 announced completion of the purchase of Fortenova Group’s frozen food business for approximately €615 million. The Feltham, England-headquartered buyer’s acquired assets include product portfolios that are well known among consumers in Croatia, Serbia, Bosnia & Herzegovina, Hungary, Slovenia, Kosovo, North Macedonia and Montenegro. Its two anchor brands, Ledo and Frikom, boast #1 market shares in many of these markets and offer a broad range of frozen products including vegetables, fruits, fish, ready meals, pastry and ice cream.
Commenting on the transaction, Nomad Foods CEO Stefan Descheemaeker stated: “We are delighted to complete this acquisition…Fortenova Frozen has performed well in 2021 and we expect the strength of our combined organizations to create value for years to come, building on a solid foundation underpinned by market leading brands, operational excellence and a strategic focus in frozen food.”
He added: “We are adapting to the post-pandemic environment while navigating macro challenges facing the broader packaged food sector. With nine months of the year now complete, the profitability of our base business is tracking at the high end of our guidance range despite the anniversary of elevated demand resulting from Covid-19, the re-opening of Europe, a dynamic inflationary backdrop and supply and logistics constraints. While we now expect a modest organic revenue decline versus the prior year, due in large part to normalizing category trends, growth is still expected to be in the mid-single digit range on a two-year compounded basis. Our brands are in strong health, our market share is expanding, and we are well positioned to sustain long-term growth.”
The acquisition of Fortenova Frozen is expected to be high-single digit % accretive to Adjusted EPS in Year 1, before synergies, and result in 2021 Adjusted EPS above $2.00 per share on a combined and annualized basis. Based on strong year-to-date performance, Fortenova Frozen is expected to achieve mid-single digit revenue growth and Adjusted EBITDA slightly ahead of the prior expectation of €53 million in 2021 on a full year basis.
The Nomad Foods management team continues to see an opportunity for Adjusted EBITDA to grow by approximately 50%, driven in part by an estimated €15 million of annual run-rate synergies by 2024 through a combination of scale, operational excellence, commercial optimization, and expense management.
2021 Guidance
Nomad Foods is updating guidance to reflect the inclusion of Fortenova Frozen for the remaining three months of 2021 and updated profitability in the base business, which is now tracking at the high-end of the prior guidance range. Management is reiterating Adjusted EPS guidance of €1.50 to €1.55, representing 11-15% growth, despite the incremental inclusion of a seasonal operating loss from Fortenova Frozen during the remaining three months of 2021.
Ranked as Europe’s leading frozen food company, Nomad Foods’ range of household name retail brands includes Birds Eye, Findus, iglo, Aunt Bessie’s and Goodfella’s.
