Nomad Foods €615m acquisition takes it into ice cream market

By Rod Addy

- Last updated on GMT

The agreement is expected to be completed during the third quarter of 2021
The agreement is expected to be completed during the third quarter of 2021

Related tags frozen Finance

Nomad Foods Limited has agreed to acquire Fortenova Group’s Frozen Food Business Group (FFBG) for approximately €615m, taking it into the European ice cream market.

FFBG is a leading European frozen food portfolio operating in new markets that were attractive to Nomad, it said. These included Croatia, Serbia and Bosnia & Herzegovina, Hungary, Slovenia, Kosovo, North Macedonia and Montenegro.

Its two anchor brands, Ledo and Frikom, had the biggest market share in many of these markets, according to Nomad. They commanded a broad range of frozen food products including fish, fruits, vegetables, ready meals, pastry and ice cream.

“The acquisition of FFBG reinforces Nomad’s European frozen food leadership while strategically expanding our portfolio into attractive new markets and creating an exciting new category adjacency in ice cream,"​ said Stéfan Descheemaeker, Nomad Foods’ chief executive officer.

Focused on frozen food

"Similar to Nomad, FFBG is singularly focused on frozen food, a fantastic category that is aligned with consumer trends including convenience and sustainability. We plan to leverage our combined pan-European scale, commercial expertise and passion for frozen food while harnessing the unique local characteristics and traditions of FFBG’s brands.”

Noam Gottesman, Nomad Foods’ co-chairman and founder, said: “We are delighted to announce this acquisition, which is consistent with our growth strategy and builds on our five-year track record of top-tier shareholder value creation.

"This transaction provides a natural extension to our existing business and creates a new platform for future expansion within Central and Eastern Europe. It also introduces us to ice cream, an exciting new category which opens new potential avenues for growth.

"Following the acquisition, our annual revenue will approach €3bn, nearly doubling the revenue base of Iglo Group, our initial anchor acquisition in 2015. We are proud of what we have accomplished so far, and we believe there is much more to come. We look forward to welcoming the FFBG team into the Nomad family.”

The entry into new markets enabled by the deal would create 'a compelling long-term growth opportunity', Nomad claimed. It expected FFBG’s organic growth to be in the mid-single digits range, double the 2%-3% organic growth profile of Nomad’s existing business.

Ice cream

In tandem with this, entry into the ice cream sector created an exciting opportunity and, because it was popular in the summer was seasonally complementary to Nomad’s core savory portfolio, which did well in winter, it added.

Ice Cream, a new category to Nomad, represents approximately half of FFBG’s revenues and would account for approximately 5% of the combined annual revenue base, Nomad said.

In a statement, Nomad said its management saw an opportunity to significantly boost FFBG’s profits by approximately 50%, through a combination of scale, operational excellence, commercial optimization, and expense management.

The transaction is expected to be funded through cash on hand and debt. It has been approved by the seller's board, is expected to be completed during the third quarter of 2021, subject to approval by stakeholders and regulatory conditions.

Morgan Stanley acted as financial advisor and Norton Rose Fulbright, Divjak Topic Bahtijarevic & Krka Law Firm and BDK Advokati are acting as legal advisors to Nomad Foods on the transaction. Akin Gump is advising Croatian conglomerate Fortenova Grupa.

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