CEO Martin Glenn has pledged to take his team with him if Birds Eye Iglo changes hands.
Private equity owners Permira instructed Credit Suisse to put the group, Europe’s largest frozen food operator, on the market last week with a price tag of €2.5bn-€3bn, after private equity companies reportedly expressed an interest in the group.
With trade buyers also likely to be interested in the Iglo group, Glenn vowed to stay on “irrespective of the capital ownership of the business”.
“Ownership issues are not a distraction to the current management. We’ve just written a three-year business plan. We feel good about the progress we’ve made, but there’s a lot to do, we’ve written a plan we can support, and I personally want to be there to drive it. I’ll do that irrespective of the capital ownership of the business.”
Since leading Birds Eye Iglo’s private equity funded acquisition from Unilever in 2006, Glenn has delivered strong cashflow and operational improvements, in a declining market, aided by NPD and investment in people and increased advertising, to pay down the group’s debts.
Over the period, compound EBITDA growth has averaged 7.5%, while deleveraging on its original €1.28bn net debt has fallen to €896m. Following the €800m acquisition of Unilever’s Italian Findus frozen food operations in 2010, according to a City source, the 2011 results are expected to show further progress, with sales up 2% to €1.56bn on the combined operations, and debt falling by €150m, from €1.56bn to €1.41bn. The City source suggests that by the end of 2012, net debt will reduce by a further €200m to 3.5x cover, making Birds Eye Iglo a strong candidate for a secondary buyout.
“The results from BEIG have surprised people because the perception in the City is that food, and particularly frozen food, is a no-go area. But the Italian acquisition is ahead of plan, and the recent presentation to bankers has shown how attractive the consolidation play can be, particularly with Findus Group separating operationally.
“As a buy and build project, it’s an attractive proposition for a new private equity fund, looking to consolidate the market further. Martin [Glenn] has done a good job, and no-one else has the synergies Birds Eye offers.”
Findus announced this week that its lenders had agreed to “waive some conditions to their financial terms relating to Q4 2011”, it said in a statement.