Iglo Group Brands (Courtesy: Iglo Group)

Nomad Holdings Limited (LSE: NHL) ("Nomad") has entered into a definitive agreement to acquire Iglo Foods Holdings Limited ("Iglo Group" or "the Company"), Europe's leading frozen food company, from a company backed by the Permira funds for approximately €2.6 billion, subject to customary closing conditions.

Upon closing, Nomad intends to change its name to Nomad Foods Limited. In connection with the transaction, the London Stock Exchange has, at Nomad's request, suspended its ordinary shares and warrants from trading on the London Stock Exchange. Nomad intends to seek re-admission of its ordinary shares to a standard listing on the Official List and trading on the London Stock Exchange as soon as practicable after closing of the transaction. In addition, following the closing of the transaction and the resumption of trading on the London Stock Exchange, Nomad expects to pursue a primary listing of its ordinary shares on the New York Stock Exchange.

Iglo Group is the leading frozen food company in Europe with sales across 12 countries and a specific focus on markets in the United Kingdom, Germany, and Italy where the Company maintains manufacturing operations. The Company's brands, which enjoy a leading market share in each of their respective regions, include Birds Eye in the UK and Ireland, Iglo in Germany, Austria, the Netherlands, and other continental European markets, and Findus in Italy. With more than 1,000 SKUs across the fish, vegetables, meat, meals and other categories, Iglo Group is focused on driving growth and margin accretion through an innovative pipeline of high-quality products. Headquartered in the UK with approximately 2,800 employees across Europe, the Company has a strong track record of operational excellence and execution through its four manufacturing plants and five primary distribution centers.

For the full year 2014, Iglo Group delivered net sales and adjusted EBITDA of €1.5 billion and €306 million, respectively. The Company's gross margin expanded to 35.4% and its adjusted EBITDA margin was 20.4%. Cash generation has been a key focus within Iglo Group as evidenced by the Company's cash conversion level of 90% in 2014.

With this anchor investment in Iglo Group, Nomad seeks to build a portfolio of best-in-class companies and brands within existing, as well as new, categories. In addition to supporting Iglo Group's organic growth initiatives, Nomad will pursue strategic and complementary acquisitions intended to enhance its consumer offering and deepen its market leadership. Nomad's Founders, Noam Gottesman, who is the Founder and CEO of investment firm Toms Capital and Co-Founder of GLG Partners, and Martin E. Franklin, who is the Founder and Executive Chairman of Jarden Corporation as well as the Founder and Non-Executive Chairman of Platform Specialty Products Corporation, have strong track records of creating value through strategic investments and acquisitions. Mr. Gottesman and Mr. Franklin also possess deep consumer products experience from previous executive roles and investments. They, along with Nomad's Board of Directors, will take a disciplined approach to evaluating acquisition opportunities, with a goal of identifying assets that have proven track records and strong management teams, are market leaders in niche markets, and possess diversified revenue bases with strong free cash flow characteristics.

Following the closing of the transaction, Mr. Gottesman and Mr. Franklin will be appointed as Non-Executive Chairmen of Nomad Foods Limited and will work closely with Iglo Group's executive management team to ensure the successful execution of the Company's organic and acquisitive growth strategies.
 

Elio Leoni Sceti: "My time as CEO has been immensely fulfilling and I am confident the talented team at Iglo Group will continue to drive growth as it executes on our strategy of innovation inspired by consumers. As part of Nomad, Iglo Group will benefit from Noam's and Martin's truly world-class leadership capabilities, which I am confident will enable the company to reach new levels of success."

Iglo Group's current Chief Executive Officer ("CEO"), Elio Leoni Sceti, has resigned from his current role to pursue another opportunity as indicated in a separate announcement that will be issued later today, but remains deeply committed to the Company's long-term vision and success. Mr. Leoni Sceti will serve as CEO until June 2015 and he will become a non-executive director of Nomad Foods Limited, effective upon closing. Nomad is undertaking a comprehensive search process to identify a replacement for Mr. Leoni Sceti and expects to appoint a new CEO of Nomad in the near future.

Noam Gottesman, Nomad's Co-Founder, commented:
 

"What people eat and how and when they eat are constantly evolving, making food one of the most resilient yet dynamic categories in the consumer sector.

Iglo Group's strong brands are clear market leaders in frozen food, and the Company's innovative and customer-centric approach will continue to drive organic growth and superior returns within the industry.

The group's scale, cash-generative profile, and experienced management team make it an ideal foundation for us to build up a world-class, global consumer foods company through a prudent M&A strategy."

"We took a highly disciplined approach to evaluating opportunities for Nomad's initial investment," added Martin E. Franklin, Nomad's Co-Founder. "During this process, it was abundantly clear that Iglo Group was a natural fit from both a strategic and a financial standpoint. This is a well-run business that has cemented itself as a leader in an attractive, yet highly fragmented sector, which paves the way for both organic and inorganic growth opportunities."

"This is a significant stepping stone for Iglo Group as we continue to revitalize consumer interest in frozen food with meaningful innovation for every day, every meal and everybody," commented Iglo Group's Chief Executive Officer, Elio Leoni Sceti. "My time as CEO has been immensely fulfilling and I am confident the talented team at Iglo Group will continue to drive growth as it executes on our strategy of innovation inspired by consumers. As part of Nomad, Iglo Group will benefit from Noam's and Martin's truly world-class leadership capabilities, which I am confident will enable the company to reach new levels of success."

Cheryl Potter, head of Permira's global consumer team, said:
 

"We are very proud to have helped Iglo Group become the undisputed European leader in branded frozen foods over the past 8 years. With the backing of the Permira funds, the company was able to invest heavily in product innovation and brand marketing as well as achieve real European scale with the acquisition of Findus Italy in 2010.

This is a great example of how we partner with leading international consumer brands and support them, including during tougher economic times, to foster innovation and sustainable growth.

Our funds will continue to support Iglo Group as minority investors and we wish the company well as it embarks on the next phase of its exciting journey with Nomad."

The transaction is expected to be funded through a combination of Nomad's cash on hand, equity and proceeds from a private placement of approximately $750 million at US$10.50 per ordinary share to a limited group of institutional investors and the expected early exercise of Nomad's existing warrants, as well as a portion of Iglo Group's existing debt. The Permira funds and senior management will re-invest a portion of their proceeds into €133.5 million of equity at closing and are expected to own approximately 9% of Nomad Foods Limited. Post-closing, the Company's net debt to EBITDA leverage ratio is expected to improve to less than 4.0x. The transaction is expected to close in the second quarter of 2015, subject to customary closing conditions.
 

In connection with Nomad's existing warrants, Nomad announces that with immediate effect the exercise price of the warrants is reduced from US$11.50 to US$10.50 per whole ordinary share (provided, however, that if the transaction is not consummated on or before November 1, 2015, the exercise price will revert to US$11.50 per ordinary share).

Nomad has received irrevocable commitments from requisite holders of the outstanding warrants necessary to consent to an amendment to the warrant instrument governing the warrants to shorten the subscription period of the warrants (which currently expires on the third anniversary of Nomad's consummation of an acquisition) so that it will expire upon the consummation of this transaction (except in certain limited circumstances).

UBS Investment Bank and Barclays acted as financial advisors and Greenberg Traurig acted as legal advisor to Nomad on the transaction. To finance this transaction, Nomad and Iglo Group intend to seek an amendment to the Company's senior credit agreement and will be assisted by Credit Suisse, Barclays, and UBS. Centerview Partners acted as exclusive financial adviser and Skadden, Arps, Slate, Meagher & Flom LLP and Clifford Chance acted as legal advisers to the seller.

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