Permira initiates Iglo Foods sale process

Private equity firm Permira has kicked off the auction process of its frozen foods company Iglo Foods, which owns Captain Birds Eye brand and the Italian unit of food company Findus.

Swiss banking giant Credit Suisse, which has been hired to handle the auction, has sent information memorandums to six potential bidders, including private equity firms Blackstone, Clayton Dubilier & Rice, BC Partners and Kohlberg Kravis Roberts.

The first round of bids is expected to be initiated in about four weeks, reported The Wall Street Journal, citing people familiar with the deal.

Iglo Foods is expected to post earnings before interest, tax, depreciation and amortisation (Ebitda) of €325m in fiscal 2011.

Permira expects the sale to fetch anywhere between €2.5bn and €2.9bn, around eight or nine times the company’s Ebitda, which will make the deal one of the biggest private equity transactions of 2012.

Bankers have however warned that the divestment would be tough to complete and that the equity firm may have to opt for a two-track method of initial public offering and sale.

Permira initiated the divestment of Iglo after it received unsolicited expressions of interest from several companies. The firm acquired Iglo from Unilever for €1.7bn in 2006, following which the frozen foods company launched new products into several markets.

In 2010, the equity firm expanded the Iglo operations further by acquiring Findus Italy from Unilever for €800m and combining it with Iglo. The rest of the Findus business is based in UK and is owned by Lion Capital.

Iglo, based in UK, manufactures pea, poultry and potato waffle products and has food production sites in Remerhaven and Reken in Germany, Lowestoft in the UK and Cisterna in Italy. Iglo has posted a profit increase of 8% every year since 2008.