The frozen food giant’s dramatic successful turnaround in the past five-and-a-half years under chief executive Martin Glenn has attracted considerable industry as well as private equity attention, sources claim.
Private equity firms Clayton Dubilier & Rice; Bain Capital; BC Partners and Blackstone Group are all rumoured to be tabling bids.
But food processors are also believed to be interested, including Nestlé, which owns the Findus brand in Switzerland. One analyst added: “Other global food concerns such as PepsiCo could be contenders, but in view of the expected price tag they would have to be major players.”
However, Julian Wild, food group director at Yorkshire solicitors Rollits, questioned food manufacturers’ ability to compete. “It’s really only private equity that could conceive of this,” he told FoodManufacture.co.uk. “There have been few deals involving trade players in recent years. Most deals have been done by private equity, because they are the people with the money.
“Private equity is only in it for the relative short term. They look at taking cost out of a business, so they tend to run it in a hard driven way. You only have to look at the UK quoted food sector to see it’s a shadow of what it used to be.”
One analyst said: “There's too much short-termism around and one fears for the long term future of UK food plc, which is why a trade buyer would be welcome.”
The bidding frenzy is understood to have been sparked by an approach made to Permira, which then, according to procedure, issued information memorandums in mid April. While reports suggested a deadline of May 10 for initial expressions of interest, mid-May is believed to be a more accurate date, with firm offers expected to be confirmed within two months. Iglo Foods Group's worth is estimated at eight to nine times its current pre-tax profit, or £2.13bn to £2.4bn.
A spokeswoman for Credit Suisse, which is rumoured to have been hired to handle the bidding process on Permira’s behalf, said: “Until a process is finalised, we never comment.”
Whatever the outcome of a sale, Wild praised Glenn, particularly his spearheading of the takeover of Findus Italy in 2011. “He has done a good job. He managed to snaffle Findus Italy, which was a pretty major blow for [competing bidder] Lion Capital.”
He said Iglo Foods Group’s success contrasted strongly with the European performance of Findus outside Italy. Reports suggest private equity houses are also considering buying this business, or parts of it, with a view to merging it with Iglo Foods Group, creating a European frozen food titan. Some commentators question the allure of such a move from Glenn’s perspective, given the patchy performance of Findus’ European arms. But others claim he has turned Findus Italy around, so could do the same in other countries.
Sources close to Glenn say he intends to retain his post following a takeover to steer the business through its next development phase.