Permira cancels refinancing plans of frozen food company Iglo

UK-based private equity firm Permira has shelved both its refinancing and sale plans of the frozen food company Iglo, which owns the Birds Eye brand.

Permira had planned a dividend recapitalisation with Credit Suisse and Deutsche Bank and was expecting to raise nearly €1.9bn, which would have allowed it to refinance the €1.4bn debt of Iglo and take a dividend of €500m to €600m.

However, Permira dropped the dividend recapitalisation plan after it could not attain the level of dividend payout it expected.

Permira decided to refinance the debt of Iglo after it rejected the second bid from private equity firms Blackstone and BC Partners, which had earlier jointly offered €2.5bn for the business.

The UK equity firm, which was expecting a bid of €2.8bn, cancelled the sale of Iglo and plans to grow the business as it believes the frozen food company is performing strongly and is a well-capitalised business.

According to the company, Iglo’s current capital structure gives it the flexibility to pursue both organic growth strategy and explore further acquisition opportunities.

Reuters, citing sources close to the company, reported that Permira is likely to retain Iglo for the next two to three years, and will seek acquisitions in Eastern Europe and other markets.

Permira initiated the divestment of Iglo this year after it received unsolicited expressions of interest from several companies and it hired Swiss banking firm Credit Suisse to handle the bidding process.

In the auction process, companies such as Bain Capital and Clayton, Dubilier & Rice were not able to clear the first round of bidding.

Blackstone and BC Partners, which had previously been competing over the acquisition, teamed up to submit a joint bid for Iglo, but eventually failed to strike a deal.

Permira acquired Iglo from Unilever in 2006 for €1.7bn, and in July 2010 it expanded the operations by combining Iglo with the Birds Eye unit and Unilever’s other frozen-food business, Findus Italy.

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Image: Permira plans to own Iglo for the next two to three years and will seek acquisitions in Eastern Europe and other markets. Photo: Iglo Group