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Permira puts Iglo Foods on the block

by Laura Board in London | Published March 26, 2012 at 12:33 PM

London buyout firm Permira has hired Credit Suisse Group to sell European frozen foods market leader Iglo Foods Group Ltd., setting the stage for one of the biggest European private equity auctions of the year.

Credit Suisse was appointed after the Feltham, England-based business attracted unsolicited approaches. The bankers expect to distribute information memorandum to potential bidders over the next few weeks, according to a person familiar with the situation.

The Swiss bank will be working on the potential $3.5 billion-plus disposal as it also handles the potential sale of the potato chips and peanuts business of Blackstone Group LP and PAI Partners' United Biscuits Ltd., which is near London.

Additionally, Oaktree Capital Management LP reportedly recently hired Barclays Capital to help it sell R&R Ice Cream plc of Northallerton, England.

Permira paid about 9.9 times Ebitda in its original €1.75 billion ($2.33 billion) purchase of the bulk of the Iglo business from Unilever plc/NV in an ebullient market in August 2006. At a more likely multiple of about 8 times Ebitda, Iglo could fetch about €2.6 billion.

Iglo sells its frozen vegetables, fish and poultry products across most of Western Europe, aside from the Nordic region and Spain, and in Greece, Turkey, Russia and other former Soviet states.

Iglo pulled in €1.6 billion of sales in 2011 and Ebitda of €320 million. At the end of 2010 it had net debt of €1.56 billion. Iglo in April replaced its mezzanine funding with senior bank debt to save up to €30 million, or around 20%, in interest expenses each year.

Blackstone, BC Partners, CVC Partners, Bain Capital LLC and Lion Capital LP are among the potential bidders for Iglo. Lion Capital may want to fuse Iglo with its Findus Group frozen foods business, the Italian operations of which have formed part of Iglo since 2010, and with its Picard Surgelés frozen foods business in France, which Lion Capital bought from BC Partners for a reported €1.5 billion in October 2010.

Lion Capital in November 2010 also bought canned-foods specialist Bumble Bee Foods LP from Centre Partners Management LLC for a reported $980 million, or 7.5 times Ebitda. Cinven has no plans to participate in the auction, a person familiar with the situation said.

A sale of Iglo is seen as a more likely and simpler exit route for Permira than an initial public offering.

Representatives at all firms including Permira and Credit Suisse either declined to comment or didn't immediately respond to a request for comment.

Permira partners Cheryl Potter and Maximilian Biagosch sit on the Iglo board. Potter handled the buyout firm's purchase of Birds Eye and Iglo brands from Unilever in 2006. Permira and Birds Eye Iglo, as it was then called, then went back to Unilever in 2010 to buy its Findus Italy frozen foods business for €805 million. Unilever had in 2006 sold other Findus businesses to EQT Partners AB, and these operations have since 2008 been held by Lion Capital.

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