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Birds Eye Iglo, which was last week put on the block for up to €3bn, pursued two separate acquisitions last year that have not yet materialised, its latest annual report shows.
The maker of Birds Eye fish fingers and frozen vegetables spent €5.7m on projects including “strategic and M&A reviews”. Martin Glenn, chief executive, described these as “two very seriously well-researched reviews into further market opportunities”.
There has been speculation that Iglo could buy rival Findus’s Nordic operations, which private equity owner Lion Capital has attempted to sell, although competition issues would likely preclude a tie-up of the UK businesses.
The outlay on projects was part of €46.4m in exceptional items which led the company, owned by Permira, to post a broadly flat operating profit – on a pro-forma basis – of €246.9m. It also took a €21m writeoff on its Portuguese subsidiary, erasing all the goodwill and roughly one-third of brand value at the time of acquisition in 2006.
However, the company registered its fifth consecutive year of growth in earnings before interest, tax, depreciation and amortisation as well as core category sales. Total net sales grew 1.4 per cent to €1.57bn while ebitda was up 7 per cent at €325.8m.
The numbers set the stage for Permira to dispose of Iglo, acquired from Unilever in two bites in 2006 and 2010, when it bought the Italian operations. Sale documents went out last week to a combination of private equity and trade buyers including Blackstone and KKR.
The sale is expected to value Iglo at between €2.6bn and €2.9bn, including net debt, which stood at €1.4bn at the year-end, assuming an enterprise value to ebitda multiple of 8 to 9 times.
Mr Glenn described 2011 as “our best year yet” and said 2012 had also started out well. He anticipated some cost inflation, but expected to be able to pass it on to retailers or by adjusting pack sizes.
He said the decision to take writedowns in Portugal came on the back of falling prices. “The level of profitability is lower because of the absolute squeeze on the consumer,” he said.
“Value added tax on food in Portugal has gone up from 7 per cent to 20 per cent. That’s a huge amount.”
At the year-end Iglo had shaved €149m off its debt, but financing charges rose from €253m to €323m as the Italian business was only bought part way through 2010. The annual net loss widened by about €10m to €82m.
Last year’s refinancing reduces annual payments by €30m, Iglo said.
Additional reporting by Stanley Pignal