As Birds Eye Iglo landed Unilever's Italian frozen food business this week, CEO Martin Glenn said strong backing in the City and a willingness to work jointly with Unilever in the future helped beat off competition from frozen food rivals.
The 805m (£681m) deal, which is expected to complete in October, will see Unilever's Rome-based frozen food business reunited with its frozen food cousins in Europe. Unilever separated the businesses in 2006 with the sale of its Birds Eye and Iglo frozen food operations to private equity firm Permira in a £1.1bn deal.
The Italian operation which had sales of 462m (£391m) last year specialises in fish, vegetables and ready meals, making it a perfect fit, said Glenn (pictured).
"We are excited about the reunion. It's exactly what we do, it's got high market shares, common categories, it's big and has scale and is badly run, with a declining top line. It's almost a mirror image of the Birds Eye Iglo business we inherited in 2006."
In an exclusive interview with The Grocer, Glenn said that, while the price tag was "competitive", it would not have been possible without the support of Permira and the debt market. The deal was funded after raising 500m (£421m) in debt, with Permira injecting the remaining 300 (£253m).
"Debt in Birds Eye trades in London, and it's the most stable debt of any leveraged buyout in the market," Glenn claimed.
"The deal shows Permira is serious about food, and the long-term fortunes of this business, and is backing me," he added.
"Who's in a rush? The debtholders are happy. Permira is getting good returns. It's no longer a case of a quick flip. I was able to persuade Permira that it would get a better return on its investment if it could put the frozen food business back together rather than investing in a new business."
Another key ingredient of the deal was Birds Eye's willingness to share in a joint supply chain so Unilever could retain dedicated frozen food supply for its ice cream business, which the Anglo-Dutch giant will retain.
"It was a big criteria for Unilever to maintain a frozen distribution supply chain in Italy. They saw us as both challenging and a known entity," Glenn explained.
The transaction means Birds Eye will own the rights to the Findus brand in Italy. Glenn said he was unconcerned about the lack of brand unity.
"It's a bit of a dog's breakfast, but who cares? There's a Captain Birds Eye, a Captain Iglo, and guess what? Italy has a Capitan Findus.
"What unites the offer is what people like to eat, and that's far easier to harmonise than a brand."
Unilever sells Italian frozen arm to Birds Eye (19 July 2010)
Birds Eye unveils plan to drive sustainability (10 July 2010)