Nomad Foods announced it will acquire Fortenova’s Frozen Food Business Group for EUR 615m on a cash free debt free basis.
During Nomad Food’s conference call held yesterday, the Management stated that the transaction value implies a multiple of under 10x EV/EBITDA when taking into consideration the estimated 2021 EBITDA of EUR 53m, including annualized run-rate synergies which are projected at EUR 15m by 2024. Meanwhile, on sole 2021E it represents a 11.6x EV/EVITDA valuation.
When comparing this to some of the preceding transactions in the table below, one can notice that the acquisition value, when observed through the multiple, is quite attractive for Nomad Foods. However, we need not to forget that the acquisition comes in the mid of the COVID-19 crisis with still a fair amount of uncertainty regarding 2021E development.
Preceding Transactions Ice Cream Multiples
| wdt_ID | Target | Country | Buyer | EV/EBITDA |
|---|---|---|---|---|
| 1 | ICFC | Spain | Ferrero | 13,20 |
| 2 | Tip Top Ice Cream | New Zealand | Froneri | 14,80 |
| 3 | Betty Ice | Romania | Unilever | 15,20 |
| 4 | Average | 14,80 |
Furthermore, the Frozen Food Business Group produces both ice cream and frozen food so the final valuation must take into consideration the EBITDA contribution of both segments, thus somewhat straying from the multiples presented in the tables.
Preceding Transactions Frozen Food Multiples
| wdt_ID | Target | Country | Buyer | EV/EBITDA |
|---|---|---|---|---|
| 1 | Gelit | Italy | PE Consortium | 8,60 |
| 2 | Grupo Iberica de Congelados | Spain | Platinum Equity | 7,10 |
| 3 | Icelandic Iberica | Spain | Iceland Seafood | 12,10 |
| 4 | Average | 8,60 |
Also note that the acquisition is expected to have a significant impact on Noma Foods as well, considering that the acquiring Frozen Food Business Group’s revenue represent 10% of Nomad Foods total revenue.
According to the Management, the transaction will be finalized by the end of Q3 of this year.
