Frozen food team Nomad Foods has been riding high on a wave of natural improve as patrons in increasing numbers turn to its manufacturers within the freezer aisle.
As CEO Stéfan Descheemaeker outlined after the corporate’s most as much as the moment quarterly update, the coronavirus pandemic has acted as a ‘tailwind’ for companies appreciate Nomad, who supply convenience and a prolonged shelf existence. And an aggressive rollout of Green Cuisine plant-based mostly totally totally devices across Europe is furthermore serving to to take revenue.
Descheemaeker expects the corporate will have the choice to procure onto these new possibilities in developed European markets appreciate the UK and Germany thru elevated selling and promotion investment.
Indeed, he stated, early indicators are certain. “[As] the COVID-19 pandemic extends… or not it’s an increasing number of definite that many of the new patrons went to our portfolio at some level of the March, April and Might well months, are repurchasing of our manufacturers and are recognising the pricetag that frozen food has to give,” the manager government neatly-known in November. “Our fair is to accurate now take these new patrons thru elevated A&P investment within the upcoming months and to within the kill preserve plenty of them in 2021 and former.”
Nonetheless elevated investment within the support of its core industry – which counts family names appreciate Birds Leer, Findus and Iglo among its stable – to present a enhance to natural improve is soft one strand of Nomad’s improve belief. The company’s management has furthermore been candid about its ambitions to magnify within the European frozen dwelling thru M&A, having as of late geared its capital structure to present a enhance to this strategy.
Descheemaeker outlined that the corporate now has the mandatory monetary flexibility and steadiness sheet clout to pounce as and when the chance arises.
“Our capital structure is now realigned to our strategy of constant natural improve coupled with complementary acquisitions interior European frozen. We live active on the M&A entrance,” Descheemaeker elaborated. “That chances are you’ll in finding to be ready because strive to be versatile, strive to be ready. And then from the second an owner decides to promote, strive to be there, so simple as that. And that is the explanation what we’re doing.”
Following on from the as of late finished procure of the Findus label property in Switzerland for about €110m, further evidence of Nomad’s M&A ambitions emerged this week, when it used to be confirmed that the corporate has entered into ‘contemporary negotiations’ to snap up the Frozen Meals Industry Neighborhood (FFBG) of Fortenova Neighborhood.
Strategic fit: ‘Making a beachhead for future consolidation’
Confirming that negotiations are ongoing, Nomad stated in a assertion the earlier day (11 January) that the proposed transaction is ‘aligned’ with management’s strategy of ‘complementing sturdy natural improve within the sinister industry’ with ‘the acquisition of market main frozen food manufacturers across Europe’.
Fortenova’s FFBG unit involves a portfolio of ‘iconic’ local manufacturers – appreciate Ledo, Čitluk and Frikom – that characteristic across multiple courses, similar to frozen fish, vegetables, ready meals, pastry and ice cream.
For its part, Fortenova, the Croatian agri-huge, used to be confident that it has chanced on a dwelling that will have the choice to nurture and grow its frozen food property.
“Nomad Foods is a company with renowned investment and operational discover document that has a clear focal level on frozen foods segment in Europe,” seen James Pearson, Fortenova Neighborhood’s chief monetary officer.
“Fortenova Neighborhood’s closing fair, over and above maximizing price, remains to be the conclusion of a transaction with a strategic partner who will in finding the utmost contribution to the further improve of the Frozen Meals Industry Neighborhood and recognise the fat price and doable of this industry and its of us,” added Fabris Peruško, Fortenova Neighborhood’s chief government officer and a member of the Board of Administrators.
Importantly, Nomad stated, the iconic local manufacturers in finding high consumer awareness in Croatia, Serbia, Bosnia & Herzegovina and several other diversified international locations in Southeastern Europe. “The acquisition of FFBG would extend Nomad’s portfolio into new and developing European markets,” the assertion neatly-known.
Barclays Capital analyst Andrew Lazar believes the property are a soft fit, given Nomad’s strategic ambition to actively participate within the consolidation of European frozen food markets.
“From a strategic standpoint, Fortenova’s Frozen Meals Industry Neighborhood boasts essential leadership positions in frozen foods within the Balkans and is factual in Nomad’s wheelhouse by strategy of the corporate’s stated technique to focal level its efforts on frozen food property in European markets,” Lazar seen.
Lazar, who stated the deal might possibly maybe doubtless be valued at spherical €600m, added he would demand merchants to search the acquisition as an ‘incremental certain’ for Nomad from both a strategic and monetary level of view.
While the scale of the settlement plan it remains a mid-sized transaction for Nomad, versus a transformational one, severely, the corporate’s management indicated that it could possibly maybe maybe doubtless also start the door to further deal-making within the space, effectively “developing a beachhead” for “doable future consolidation interior Central and Jap Europe”.
Nonetheless will the deal be done?
While upbeat on the strategic rational within the support of the settlement, Nomad used to be furthermore at difficulty to emphasise that an settlement is yet to be reached.
“These discussions are preliminary and there can even be no assurance that a transaction shall be finished,” the team neatly-known.
Nonetheless, Fortenova Neighborhood struck a extra confident tone. The regional agri-food huge published that the due diligence project is now total, allowing the companies to start out the ‘next fragment’ of negotiations. The company location out a timetable for completion, which is expected this summer season.
“I demand the next fragment of the Frozen Meals Industry Neighborhood sale project to be finished by the cease of Q1 this year thru the signing of a Sale and Make a selection Agreement. If so, the transaction might possibly maybe doubtless be finished post receipt of regulatory approvals, as early as summer season 2021,” published chief government Peruško.
Whether or not Nomad is able to ink this acquisition, what remains definite is that we are able to demand further aggressive M&A exercise from the frozen food expert in Europe.