Nomad Foods has announced the completion of its acquisition of Fortenova Group’s frozen food business for €615m (£528m), after clinching the agreement to do so in March this year. The news follows its acquisition of Findus Switzerland in November 2020.
Fortenova Group's European frozen food portfolio operated in attractive markets that were new to it, Nomad Foods said. These include Croatia, Serbia, Bosnia & Herzegovina, Hungary, Slovenia, Kosovo, North Macedonia and Montenegro.
Its two anchor brands, Ledo and Frikom, had strong consumer awareness and number one market share in many of these markets and offered a broad range of frozen food products including fish, fruits, vegetables, ready meals, pastry and ice cream, Nomad Foods added.
'Solid foundation'
"Fortenova Frozen has performed well in 2021 and we expect the strength of our combined organisations to create value for years to come, building on a solid foundation underpinned by market leading brands, operational excellence and a strategic focus in frozen food,” Stefan Descheemaeker, Nomad Foods’ chief executive officer, said.
“We are adapting to the post-pandemic environment while navigating macro challenges facing the broader packaged food sector. With nine months of the year now complete, the profitability of our base business is tracking at the high end of our guidance range despite the anniversary of elevated demand resulting from COVID-19, the re-opening of Europe, a dynamic inflationary backdrop and supply and logistics constraints.
"While we now expect a modest organic revenue decline versus the prior year, due in large part to normalizing category trends, growth is still expected to be in the mid-single digit range on a two-year compounded basis. Our brands are in strong health, our market share is expanding, and we are well positioned to sustain long-term growth.”
Expected revenue and profit growth
Based on strong performance in the current financial year, Fortenova Frozen should achieve mid-single digit revenue growth and adjusted profit before interest, taxes, depreciation and amortisation slightly ahead of the prior expectation of €53m in 2021 at year-end, Nomad Foods said. Its management believed it could achieve 50% growth in that profit line, driven in part through a combination of increased scale, operational excellence, commercial optimisation, and expense management.
Morgan Stanley acted as financial advisor and Norton Rose Fulbright, Divjak Topic Bahtijarevic & Krka Law Firm and BDK Advokati are acting as legal advisors to Nomad Foods on the transaction.