Permira Advisers LLP may call off the sale of Iglo Foods Group Ltd. and is exploring ways to pay itself a dividend from its stake in the fish-finger maker after the final bid fell short of the buyout firm’s target, people with knowledge of the talks said.
Blackstone Group LP (BX) and BC Partners Ltd. submitted an offer last week that values Iglo at about 2.5 billion euros ($3.1 billion), while Permira expected at least 2.8 billion euros, said the people, who asked not to be identified because the process is private. Credit Suisse Group AG (CSGN), which is advising Permira on Iglo, is working on debt financing that would be used to pay Permira a dividend, allowing it to get some cash from the investment, they said.
Permira, seeking to return cash to investors as it tries to raise 6.5 billion euros for a new buyout fund, received a final offer for the frozen food company after Blackstone and BC agreed to submit a joint bid, according to the people. The London-based firm bought Iglo from Unilever NV (UNA) for 1.73 billion euros in 2006, and expanded it after purchasing the Dutch consumer goods maker’s Findus operations in Italy for 805 million euros in October 2010. A 2.8 billion-euro valuation for Iglo would result in Permira obtaining about double its investment, two of the people said.
Officials at Blackstone, BC, Permira and Iglo declined to comment.
Blackstone owns U.S. frozen food maker Pinnacle Foods Finance LLC, which in turn owns the U.S. rights to Birds Eye, and London-based BC Partners once owned the French frozen food maker Picard Groupe SA. No final decision on Iglo has been made and the buyout firms may consider coming back with a revised offer, said two of the people.
A group of banks including Credit Suisse, Nomura Holdings Inc., JPMorgan Chase & Co., Goldman Sachs Group Inc. and UBS AG have agreed to lend about 2.1 billion euros to fund the two firms’ joint Iglo bid, the people said. This is equivalent to about 6.25 times Iglo’s earnings before interest, taxes, depreciation and amortization, they said.
Blackstone may have lost interest in Iglo because it is looking at bidding for Bolthouse Farms, which makes juices and salad dressing, according to one person with knowledge of the matter. Bolthouse, which is closely held, is getting final bids and may sell for $1.5 billion to $2 billion, a person said.
Typically, private equity firms get money from investors such as pension plans and endowments, with a mandate to spend it within five to six years and return it with a profit after about 10 years. Investors tend to wait for distributions from earlier funds before committing again to new pools.
Permira sold part of its stake in Galaxy Entertainment Group Ltd. last year, and agreed to sell the animal-feed additives company Provimi SA to Cargill Inc. In March, it agreed to sell its 51 percent stake in NDS Group Ltd. to Cisco Systems Inc., the largest maker of equipment for computer networks, in a sale that valued the maker of software for pay-TV channels at about $5 billion.
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