Nomad Foods signed a binding option agreement with LionGem Sweden 1 AB to acquire Findus Sverige AB and its subsidiaries for approximately £500 million. Nomad Foods is a special purpose acquisition vehicle based in London.
The stock price of Nomad Foods increased more than 4% to $21.50 today around 11:35 AM EDT.
Pershing Square Capital Management, the activist hedge fund controlled by Bill Ackman owns 21.7% stake in Nomad Foods as of June 2015.
Nomad Foods transaction details
According to Nomad Foods, it would acquire Findus Group’s continental European businesses in Belgium, Denmark, Finland, France, Norway, Sweden, and Spain.
The transaction also included the intellectual property and commercialization rights to Findus, Lutosa, and La Cocinera brand in the respective markets.
Nomad Foods would fund the £400 million cash portion of the acquisition price using its cash on hand and debt. It would also issue approximately 8.4 million ordinary shares to LionGem Sweden 1 AB at the closing of the transaction.
Under the terms of the agreement, LionGem Sweden 1 AB is prohibited from transferring any of the shares within one year following the closing of the deal. It would be restricted from transferring 50% of the shares within two years after the closing.
Nomad Foods expects LionGem Sweden 1 AB to exercise the option after the completion of works council consultation in the fourth quarter of 2015. The companies will then enter into a definitive sale and purchase agreement. Nomad Foods is expecting to close the acquisition shortly after. The deal would be subject to customary closing conditions and regulatory approvals.
The acquisition is expected to be immediately accretive to Nomad’s earnings with approximately €25 million to €30 million of annual synergies over the next three years.
Nomad Foods currently operates Findus in Italy through Iglo Foods Holdings and its subsidiaries. The company purchased Iglo Foods for €2.6 billion.
Transaction is in line with Nomad Foods growth strategy
In a statement, Nomad Foods CEO Stéfan Descheemaeker said, “This transaction is in line with our growth strategy, an exciting addition to the Nomad portfolio, and a significant milestone in reaching our goal of building a global consumer foods company.”
Descheemaeker emphasized that Findus is a “well-loved and iconic name” in Europe, and combining it with Nomad Foods creates a “unique value proposition and unlock new growth opportunities.”
Nomad Foods co-Chairmen and co-founders, Noam Gottesman and Martin E. Franklin jointly commented, “Curating a portfolio of market-leading consumer foods companies remains our core objective and this acquisition furthers our long-term commitment to growing the frozen food sector in Europe through ongoing investments in brands, innovation, and product development.”
