Sector News

Nomad Foods to Buy European Arm of Findus for $780 Million

August 13, 2015
Food & Drink
Nomad Foods Ltd. on Thursday confirmed it is buying the continental European operations of Findus Group for £500 million ($780.7 million) in cash and shares, marking its second acquisition this year in its efforts to build a European frozen-foods giant.
 
Nomad, founded by entrepreneurs Martin E. Franklin and Noam Gottesman, said it had entered into an option agreement to buy Findus Sverige AB and its subsidiaries from the company’s backers, which including Highbridge Principal Strategies, Lion Capital LLP and Sankaty Advisors.
 
The deal includes Findus businesses in Sweden, Norway, Finland, Denmark, France, Spain and Belgium. These operations include the intellectual property and commercialization rights to the Findus, Lutosa, and La Cocinera brands in the respective markets. The remaining part of Findus, including Young’s Seafood Ltd. in the U.K., will remain under the ownership of the seller, Nomad said.
 
The Wall Street Journal reported on Wednesday that Nomad was close to a deal, citing people familiar with the matter.
 
Mr. Franklin said the deal would allow Nomad to grow its frozen foods business, while simultaneously pursuing other acquisitions, both in Europe and the U.S. “There are places in frozen food where we think we can find growth,” he said. “At the same time, we are keeping our eye on opportunities in the U.S.,” Mr. Franklin added.
 
Nomad expects the deal to boost earnings as soon as it completes, and foresees €25 million ($27.9 million) to €30 million cost savings over the next three years.
 
Messrs. Franklin and Gottesman founded Nomad in early 2014. Nearly 20% of the company is owned by hedge-fund billionaire William Ackman’s Pershing Square Capital Management LP fund, filings show.
 
In June, Nomad sealed a deal to buy Iglo Foods—which includes the Birds Eye brand—for €2.6 billion from a company backed by Permira funds. The company said the deal for Iglo would serve as its “anchor” investment, as it pursued acquisitions of other frozen food brands as well as other categories.
 
Their European shopping spree comes as major consumer-goods makers such as Nestlé SA and Unilever PLC re-evaluate how once-core brands fit into their sprawling portfolios. The U.S. is also undergoing a consumer-goods shake-up, as companies such as Kraft Foods Group Inc. and H.J. Heinz Co. combine and potentially consider selling off some of their own brands.
 
Findus reported earnings before interest, taxes, depreciation and amortization of £39.2 million at the end of the first quarter of 2015, up 5.4% from the year-earlier period.
 
Mr. Franklin’s other investment vehicles include Jarden Corp, which he built up in the early 2000s through a series of niche consumer-products acquisitions and Platform, a specialty-chemicals company he created in 2013, which has spent about $5 billion on acquisitions so far.
 
Centerview Partners was the financial adviser to Findus on the deal, this being the second business it worked to sell to Nomad. The boutique investment bank also advised Iglo on its sale to Nomad. UBS advised Nomad.
 
By Ian Walker and Shayndi Raice 
 

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