Through this transaction, Nomad will acquire Findus Group’s operations in Sweden, Norway, Finland, Denmark, France, Spain and Belgium, from investors including Lion Capital and Highbridge Principle Strategies.
The remaining part of the Findus Group, including Young’s Seafood in the UK, will remain under the ownership of the seller.
A source close to the deal told FoodManufacture.co.uk this was because the Findus operations being acquired were “complementary to the existing Nomad business and in line with the company’s strategic objectives in specific geographies”.
The source said that Nomad had a “disciplined set of acquisition criteria” and that its targets must be established companies with an excellent track record and market leaders in niche markets. They must also have a diversified revenue base, strong free cash-flow over the long-term and an experienced management team with track record of success.
The announcement came four months after Nomad swooped in on Birdseye fish finger and frozen vegetable owner Iglo Group, for £1.9bn.
Nomad’s masterplan
Nomad, an acquisition company set up a year ago by US dealmakers Noam Gottesman and Martin Franklin, has made no secret of its masterplan to create a sizeable European frozen food manufacturing group supplying the major supermarkets.
While the investment vehicle is clear on its goals, the extent to which the UK frozen foods sector will figure in Nomad’s vision remains to be seen.
Analyst view
“Birds Eye is a major UK player and I am sure the UK is an important part of Nomad’s plans, but possibly not through the acquisition of Findus UK,” said Julian Wild, corporate finance partner at Rollitts.
“The UK market is dominated by the top four grocery retailers and frozen foods have been a particularly competitive and relatively unprofitable market because chilled has such a strong position, unlike in continental Europe.”
Asked why he thought the UK operations of Findus Group were not included in the current deal, he said: “Nomad is an acquisition vehicle originally formed to buy Iglo Foods and to be a consolidator in international branded frozen foods.
“Not surprisingly, being private equity owned, the continental European businesses of Findus were next on their list of things to do. Those businesses were readily saleable for a price which made sense to both sides.”
UK businesses not yet primed for sale
The UK operations of Findus Group, on the other hand, were more problematic, he said.
“The UK Findus frozen business has had a difficult time, not helped by the horsemeat scandal and very competitive trading conditions in frozen food with the major retailers,” he said.
The other part of the UK business is Young’s Seafood, a substantial part of which is chilled and own label. Wild said that it was therefore not an obvious fit for Nomad’s expansion strategy.
He added: “Furthermore Young’s recently lost the Sainsbury’s contract reported to be worth £100M and is going through a restructuring with potential site closures and job losses. It will take time for the UK business to be in a saleable condition.”
At some stage, though, he predicted that Lion Capital and its co-owners would exit Findus UK.