Birds Eye, the company behind six decades of children’s fish-finger-and-frozen-pea dinners, is to be sold to a pair of US tycoons as they make their first move in building a global food company.
Private equity house Permira has agreed to sell Birds Eye’s parent, Iglo Group, for €2.6bn (£1.9bn) to Nomad Holdings, which was established last year to create a global consumer brands company.
Birds Eye was founded after Clarence Birdseye, an American explorer and scientist, spotted the preservative effects of quick freezing on a hunting trip 100 years ago.
Unilever bought the UK business in the 1940s and expanded in Europe under the Iglo name in the 1950s. Iglo sells food in 12 countries.
Iglo is based in Feltham, west London, and its UK factory is in Lowestoft, Suffolk. It also has factories in Germany and Italy and employs about 2,800 people.
Birds Eye fish fingers became a staple of British dinner tables in the 1970s, helped by the popularity of Captain Birds Eye, the bearded sea dog who promised “only the best for the captain’s table” in TV adverts.
The character was dropped from Iglo ads last year, although he still appears on fish finger packets.
Iglo is Europe’s biggest frozen food producer with about 10% of the market and is more than twice the size of its nearest rival, Findus. Birds Eye says its products are in the freezers of 95% of homes in the UK, with Britons eating more frozen food per head than consumers in any other European country.
UK frozen food sales make up about 5.5% of the total grocery market, compared with 40% for fresh and chilled, but demand has grown in recent years as shoppers have tried to cut down on waste. Sales rose 2.5% in 2013 and 0.9% last year to reach £5.8bn.
Edward Garner, a director at Kantar Worldpanel, said: “Frozen food has always had a bit of an image problem in this country but Birds Eye has been trying to change that by making frozen food a treat rather than a distressed product.” He said the upmarket “inspirations” line was a successful product for Birds Eye.
Garner said that in the 12 weeks to the end of March, Birds Eye sales were up 4% from a year ago compared with a flat grocery market. “They are beating the market at the moment,” he said.
The US tycoons Martin E Franklin and Noam Gottesman listed Nomad a year ago to buy a business as the first move in creating a global consumer brands company. Franklin also chairs Jarden, a US consumer business which has expanded quickly through a string of acquisitions. He took control in 2001 and bought more than 120 brands to turn it into a company valued at $10bn (£6.7bn). He grew up in the UK and is the son of Sir Roland Franklin, who was the right-hand man to the corporate raider Sir James Goldsmith.
Gottesman is a billionaire former hedge fund manager and the chief executive of Toms Capital, an investment company which backs Nomad. Since launching Nomad with the aim of repeating what Franklin had achieved in the US, they have targeted food as a sector for multiple acquisitions. The company will change its name to Nomad Foods.
Franklin said: “We took a highly disciplined approach to evaluating opportunities for Nomad’s initial investment. During this process it was abundantly clear that Iglo was a natural fit. This is a well-run business that has cemented itself as a leader in an attractive yet highly fragmented sector.”
Nomad is chaired by Lord Myners, the former City minister who proposed plans to overhaul the Co-operative Group last year. Myners is also a former chairman of Guardian Media Group.
Permira bought Birds Eye and Iglo from Unilever in 2006 for €1.7bn at the peak of the private equity boom. It changed the name of the business from Birds Eye Iglo to Iglo Group in 2011 and bought Findus in Italy to expand the business by half. Permira will keep a 9% stake in the company.
Cheryl Potter, head of Permira’s consumer team, said: “The plan was to take a business that was non-core for Unilever and create a pan-European frozen food platform.”
Permira tried to sell Iglo in 2012 but offers did not meet the asking price. Private equity firms generally own businesses for up to five years before selling them on but the financial crisis forced them to hold on longer to investments before cashing in.
