The future of frozen food producers has not been decided yet. (Photo: Birds Eye/Stock File/FIS)

Iglo gets EUR 2.6bn bid

UNITED KINGDOM
Friday, June 22, 2012, 02:00 (GMT + 9)

Permira is expected to turn down a joint bid for Iglo Group from BC Partners and Blackstone worth less than EUR 2.6 billion because Permira's asking price is set at EUR 2.8 billion.

The two private equity firms joined forces after Blackstone withdrew from the auction last week. If successful, the team intends to share ownership of Iglo and to rotate the chairpersonship every year.

In light of the relatively low bid, Permira may have to look into keeping the company, which would involve refinancing Iglo's EUR 1.4 billion worth of loans. At the same time, it is anticipated that Permira will not be able to do this and also raise enough funds to pay management given the duress debt markets are under, The Telegraph reports.

Permira owns Birds Eye and Bake to Perfection.
 
It is contended that Martin Glenn, Iglo's chief executive, would be a key player in the advancement of the frozen foods business because he is pivotal in the planning of acquisitions such as Findus, which is currently being fought over by vulture fund Triton and owner Lion Capital.

If Permira kept Iglo without obtaining a cash deal that would allow it to keep the management team, Glenn would probably quit.

This situation would also leave investors without a pay day and constitute a disaster for Permira, as it is trying to raise EUR 6.5 billion from its investors for a new fund.

The BC Partners/Blackstone bid will also seek to obtain tens of millions of pounds in deductions to take care of Iglo's pension fund deficit, taxes and other debts. BC Partners/Blackstone have been promised around EUR 1.6 billion of debt from the banks, which would leave them in charge of acquiring less than EUR 1 billion.
 
Right now, leveraged finance bankers are finishing the debt package to back the buyout of Iglo. Market consensus is that the debt will be made up of a senior loan and a private subordinated instrument.

Some five banks are expected to be involved, including the two M&A advisors to Blackstone -- Goldman Sachs and Nomura -- and the two M&A advisors to BC Partners -- JP Morgan and UBS -- as well as sell-side advisor Credit Suisse, according to banking sources, Reuters reports.

Related article:

- Iglo Group on sale for EUR 3 bln

By Natalia Real
editorial@fis.com
www.fis.com

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