Unilever, the world’s second-biggest consumer goods maker, agreed to sell its Italian frozen-foods unit to a group led by Birds Eye Iglo for 805 million euros ($1.04 billion) as it focuses on building international brands.
Birds Eye Iglo, which is owned by private-equity firm Permira Advisers LLP, has a “significant stake” in the buyer of Findus, Unilever said in a statement. Permira arranged about 500 million euros of leveraged loans to fund the acquisition, according to two people familiar with the deal.
“The proceeds are a little bit better than anticipated,” said Gerard Rijk, an analyst at ING in Amsterdam, adding that he had expected a deal of 490 million euros to 630 million euros. “This is a divestment of a low-growth area, so the company is continuing on its strategy and is executing quite well.”
Unilever, which makes Dove body wash and Liptons tea, is selling Findus as it shifts away from local labels to focus on international brands to increase profit and reach its goal of doubling sales. The unit, which had revenue of 462 million euros in 2009, is the company’s last non-ice cream frozen-food business in Europe.
Unilever is now “in a stronger position to focus on its core categories outside frozen foods and to achieve long-term growth in the Italian market,” James Hill, chairman of the London- and Rotterdam-based company’s Italian unit, said in the statement. About 650 employees will transfer to Birds Eye.
Unilever plans to buy Sara Lee Corp.’s shower gel and European detergents business for $1.7 billion in its first major takeover in nine years. The acquisition would add the Sanex soap brand and enable Unilever to sell more personal-care products in Europe. The company has earmarked 1 billion euros to 2 billion euros a year for so-called bolt-on acquisitions.
Unilever sold most of its European frozen foods unit, which included the Iglo and Birds Eye brands, to Permira Funds for 1.73 billion euros in 2006. The Findus unit price is “quite high for a low-growth entity,” Rijk said today, “but Birds Eye Iglo can reap synergies as they are already active in this business.”
Chris Davison, a London-based spokesman for Permira, confirmed that the Findus acquisition is being funded through debt and equity. He declined to comment further.
Unilever’s shares were up 1.2 percent at 23.30 euros at 2 p.m.in Amsterdam.