UPDATE: Unilever Sells Italian Unit To Permira For EUR805 Million
19 Juli 2010 - 1:51PM
Dow Jones News
Anglo-Dutch consumer goods giant Unilever PLC (UN, UL) said
Monday it is selling its Italian frozen food business to Permira's
Birds Eye Iglo for EUR805 million, ending a hotly-fought auction
between rival buyout firms.
The deal comprises a factory in Cisterna, Italy, which produces
the brands 4 Salti in Padella, Sofficini, Capitan Findus and That's
Amore. A total of 650 factory and head office staff will transfer
as part of the deal.
"With this deal, 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," said James Hill, Chairman
of Unilever Italy.
The business generated sales of EUR462 million in 2009.
The unit was put on the block in April and Goldman Sachs (GS)
hired to run the sales process, which attracted a raft of private
equity firms in its initial stages.
Permira and rival Lion Capital were expected to be frontrunners
early on because each has a complementary business--Lion Capital
owns Findus Group and Permira has the rest of Bird's Eye, having
bought it from Unilever four years ago for EUR1.7 billion. The
Italian operations were the only part that Unilever held on to at
the time.
In the end Permira was able to stump up more money because of
greater synergies, one person familiar with the situation said.
"We are excited about the reunion of Findus Italy and Birds Eye
Iglo," said Birds Eye Chief Executive Martin Glenn.
"We are committed to building and investing in a sustainable and
profitable business for the future and believe that our combined
capabilities will allow us to deliver an unrivalled frozen food
offer across Europe to our consumers," he added.
The deal is being financed with EUR300 million equity coming
jointly from Permira and Birds Eye and the balance with a loan
package, illustrating that banks are willing to provide
decent-sized chunks of debt for the right businesses.
Since the financial crisis private equity firms have generally
had to expect to finance leveraged buyouts with at least 50% of
equity which means less profit when the business is sold than if
the acquisition is more highly-leveraged.
At 1100 GMT, Unilever shares were up 1.17%, or 22 pence, at 1904
pence in a slightly higher London market. They have risen over 25%
in the past year.
-By Michael Carolan and Marietta Cauchi, Dow Jones Newswires;
44-20-7842-9278; michael.carolan@dowjones.com
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