Lion Capital secures £500m Findus partial exit

The offer price consists of £400m in cash and debt, while Nomad will issue £100m of new shares to Lion and co-investors in Findus, Highbridge Principal Strategies and Sankaty Advisors. The shares will face a lock-up period of a year, with Lion et al. restricted from selling 50% of the shares for two years after the deal closes.

Nomad Foods, a packaged foods buy-and-build platform, will acquire Findus's operations in Sweden, Norway, Finland, Denmark, France, Spain and Belgium. Lion will retain the remaining parts of Findus, including Young's Seafood.

The transaction is expected to close by the end of Q4 2015, and the selling investors face a break fee of £15m if the purchase option is not exercised within five months, after which Nomad faces a £34.2m break fee if it cannot raise sufficient financing for the acquisition.

It was previously rumoured that Lion was trying to sell Findus's Nordic operations, back in 2012, with reports suggesting the GP had engaged Rothschild for talks with bidders Nestlé, Orkla and Leroy Seafood Group for the sale. At the time, it was suggested the Nordic division would net Lion €700-800m.

The spin-off comes a year after Lion, JP Morgan and Highbridge completed a €200m dividend payout through the issue of a junk-rated PIK note, rated CC by Fitch.

Speaking to unquote" at the time, Investec's Gary Edwards predicted the splitting up of Findus, calling it a prime candidate, and that selling off divisions and brands would raise cash, "improve the balance sheet and make the PIK notes look better value".

In January, Findus acquired Spanish frozen foods brand La Cocinera from Nestlé. The Findus division acquired by Nomad will retain the rights to market the La Cocinera brand in the Nordic region, France, Spain and Belgium.

The deal is Nomad Food's second frozen foods acquisition from private equity in 2015, having bought Iglo from Permira for €2.6bn in April.

The deal for Findus consolidates Nomad's continental European ownership of the brand, as Findus Italy was acquired by Iglo from Nestlé in 2010, during Permira's ownership.

Previous funding
In 2012, Lion relinquished its controlling stake in the company to JP Morgan and Highbridge, as the two mezzanine holders injected £150m for a 50% stake, as part of the debt restructuring. As a result, Lion's stake fell to a third of the equity.

Similarly, in 2013 the group issued £410m of bonds to repay senior debt and refinance existing credit facilities.

Lion acquired Findus in 2008 – then named FoodVest Group – from CapVest for £1.1bn, with JP Morgan underwriting a debt package of £550m senior debt, as well as a £60m revolving credit facility and a £180m mezzanine facility.

Before the sale to Lion, CapVest had been growing FoodVest through bolt-ons. Most notable among these deals was the acquisition of Findus from EQT in 2006 for around SEK 5bn. Findus itself had been acquired by EQT in a carve-out from Nestlé in 2000.

Company
Findus was founded in Sweden in 1941 and is one of Europe's largest producers of frozen foods. The continental European division operates in Sweden, Norway, Finland, Denmark, France, Spain and Belgium.

The continental European division of Findus has 1,500 employees and six manufacturing facilities in Norway, Sweden, France and Spain.

It had sales of around €600m last year with an adjusted EBITDA margin of approximately 11%.

In 2013, Findus was embroiled in a scandal when tests found the company's beef lasagnas contained as much as 100% horse meat.

People
Lyndon Lea is the founder of Lion. Stéfan Descheemaeker is the CEO of Nomad. James Hill is the CEO of Findus.

Advisers
Equity – UBS (Corporate finance, debt advisory); Credit Suisse (Corporate finance, debt advisory); Greenberg Taurig (Legal); Barclays (Debt advisory).
Vendor – Centerview Partners (M&A); Latham & Watkins (Legal).

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• Topics
• Nordics
• Exits
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• Sweden
• Lion Capital
• Investec
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