Nomad Foods has announced that it has completed the acquisition of Fortenova Group’s frozen food business (Fortenova Frozen) for approximately €615 million.
Fortenova Frozen comprises Ledo plus d.o.o. in Croatia, Ledo Čitluk in Bosnia & Herzegovina and Frikom d.o.o. in Serbia, as well as several related companies in other south east European markets.
Its portfolio includes frozen food and ice cream brands that have earned recognition among consumers in Croatia, Serbia, Bosnia and Herzegovina.
Value Creation
Commenting on the transaction, Stefan Descheemaeker, Nomad Foods’ chief executive officer, said, “We are delighted to complete this acquisition and are eager to welcome the team to Nomad Foods. Fortenova Frozen has performed well in 2021 and we expect the strength of our combined organisations to create value for years to come, building on a solid foundation underpinned by market leading brands, operational excellence and a strategic focus in frozen food.”
The acquisition of Fortenova Frozen is expected to be high-single digit percentage accretive to adjusted EPS in the first year, before synergies, and result in 2021 adjusted EPS above $2.00 per share on a combined and annualised basis, Nomad Foods said.
Fortenova Frozen is expected to achieve mid-single digit revenue growth and adjusted EBITDA slightly ahead of the prior expectation of €53 million in 2021 on a full year basis, based on its strong year-to-date performance.
Nomad Foods added that its management continues to see an opportunity for adjusted EBITDA to grow by approximately 50%, driven in part by an estimated €15 million of annual run-rate synergies by 2024 through a combination of scale, operational excellence, commercial optimisation, and expense management.
'Major Transaction'
Fabris Peruško, CEO and member of the board of directors of Fortenova Group, stated, “This major transaction has been closed one year after the Frozen Food Business Group divestment process was initiated in Fortenova Group, despite the project having been carried out under very challenging circumstances of the pandemic.
“We have worked hard and are proud of the fact that with this transaction we have met our most important goals in full. The achieved price of €615 million has acknowledged the value of our business and at the same time we have introduced a strategic partner to the region who will continue to develop the business and be focused on developing Ledo’s and Frikom’s iconic brands.”
Guidance Update
The Birds Eye parent also updated its guidance to reflect the inclusion of Fortenova Frozen for the remaining three months of 2021. It also updated the profitability in its base business, which is now tracking at the high-end of the prior guidance range.
The company reiterated its adjusted EPS guidance of €1.50 to €1.55, representing 11%-15% growth, despite the incremental inclusion of a seasonal operating loss from Fortenova Frozen during the remaining three months of 2021.
Morgan Stanley acted as financial advisor and Norton Rose Fulbright, Divjak Topic Bahtijarevic & Krka Law Firm and BDK Advokati as legal advisors to Nomad Foods on the transaction.
