July 12, 2012

Permira withdraws plans to refinance Iglo

Private equity firm, Permira, has withdrawn plans for the refinancing and sale of the frozen food firm, Iglo.

Permira had planned a dividend recapitalisation with Credit Suisse and Deutsche Bank and was expecting to raise nearly EUR1.9 billion (US$2.3 billion), which would have allowed the equity firm to refinance EUR1.4 billion (US$1.7 billion) debt of Iglo and pay itself a dividend of up to EUR600 million (US$734 million). However, Permira decided to drop the dividend recapitalisation plan after it could not attain the level of dividend pay-out 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 EUR2.5 billion (US$3.06 billion) for the business.

Permira, which was expecting a bid of EUR2.8 billion (US$3.4 billion), 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 US$3.06 billion.

Permira acquired the Iglo from Unilever in 2006 for EUR1.7 billion (US$2.08 billion), and in July 2010, it expanded the operations by combining Iglo with Birds Eye unit and Unilever's other frozen-food business, Findus Italy.