Permira drops refinancing plans for frozen food firm Iglo

Permira had planned a dividend recapitalization with Credit Suisse and Deutsche Bank and was expecti…

Permira had planned a dividend recapitalization with Credit Suisse and Deutsche Bank and was expecting to raise nearly €1.9bn, which would have allowed the equity firm to refinance €1.4bn debt of Iglo and pay itself a dividend of €500m to €600m. However, Permira decided to drop the dividend recapitalization plan after it could not attain the level of dividend payout it expected, according to investors.

Permira decided to refinance the debt of Iglo after it rejected the second bid from private equity firms Blackstone and BC Partners, which had earlier jointly offered €2.5bn for the business.

Permira, which was expecting a bid of €2.8bn, cancelled the sale of Iglo and plans to grow the business.

Permira noted that the momentum in the business is strong and its current capital structure gives it the flexibility to pursue both its organic growth strategy and explore further acquisition opportunities.

According to sources close to the company, Permira would continue to own Iglo for the next two to three years, and will seek acquisitions in Eastern Europe and other markets.

Permira initiated the divestment of Iglo this year after it received unsolicited expressions of interest from several companies and it hired Swiss banking firm Credit Suisse to handle the auction. In the auction process, companies such as Bain Capital and Clayton, Dubilier & Rice were not able to clear the first round of bidding.

Blackstone and BC Partners, which had previously been competing over the acquisition, teamed up to submit a joint bid for Iglo; however, they refuse to push beyond €2.5bn.

Permira acquired the Iglo from Unilever in 2006 for €1.7bn, and in July 2010, it expanded the operations by combining Iglo with Birds Eye unit and Unilever's other frozen-food business, Findus Italy.