Private equity house Permira is considering a refinancing of frozen food firm Birds Eye, which would land the firm a €500m (£397m) windfall.
Under the terms of the refinancing, the level of Birds Eye’s debt would expand to almost €2bn from €1.4bn.
Permira, which bought the UK-based frozen food producer from Unilever for €1.6bn in 2006, is understood to be considering the refinancing in order to return value to shareholders.
A source told City A.M. that Birds Eye’s strong growth throughout the past few years, helped by strong performance of subsidiary Findus Italy, which it bought from consumer giant Unilever in 2010 for €800m, meant that refinancing the business could return some of that value to investors in the form of a dividend.
Total net sales at Iglo Group, the parent company of Birds Eye, grew 1.4 per cent to €1.5bn for the year ended 31 December 2011. Two of Permira’s partners – Cheryl Potter and Maximilian Biagosch – sit on the Iglo board.
The source also said that the refinancing would put a better capital structure in place and allow Birds Eye to “back up” its growth and innovation strategy over the next three to four years. The source added that the acquisition of Findus Italy, the frozen Italian food producer, had “significantly transformed” the Birds Eye business, and the money raised from the refinancing could pave the way for future consolidation in the market.
Permira put Birds Eye up for sale earlier this year, but offers from rival private equity houses BC Partners and Blackstone were both rejected. It is understood that Permira, whose portfolio includes names such as high-street chain New Look, Just Retirement and Hugo Boss, was looking for around €2.8bn, but offers fell short at between €2.5 and €2.7bn.
Private equity house Permira owns around 20 companies globally, with around 35 per cent in the consumer sector and 33 per cent in TMT.