By Peter Evans
LONDON--When Martin E. Franklin and Noam Gottesman founded Nomad
Holdings Ltd. in early 2014, the two veteran entrepreneurs knew
they wanted to buy something. They just didn't know what.
The company raised $500 million with an initial public offering
in April 2014, but it wasn't until a January meeting in Israel that
Nomad's creators stopped wandering and settled on a direction for
their investment vehicle: the food industry.
Now Messrs. Franklin and Gottesman, backed by the surging
strength of the U.S. dollar, want to climb to the top of the food
chain. Nomad last week agreed to buy U.K.-based frozen-food maker
Iglo Foods Holdings Ltd. for EUR2.6 billion ($2.81 billion) from
Permira Advisers LLP, the first in what Nomad said would be a spree
of food acquisitions around the world.
"We have a lot of cash to play with. There is no limit to our
ambition," the 50-year-old Mr. Franklin, who will continue in his
role as executive chairman of consumer-products company Jarden
Corp., said in an interview.
Nomad has picked a good time to build a global food company. The
$49 billion merger of Kraft Foods Group Inc. and H.J. Heinz Co.,
announced last month, was the biggest in a series of recent food
deals. Bankers and analysts expect the wave of consolidation to
continue through 2015. Driving that trend, major consumer-goods
makers such as Nestlé SA and Unilever PLC are selling off food
brands that were once core to their business but now sit
uncomfortably in reshaped portfolios.
At the same time, private-equity firms that purchased food
brands around the time of the financial crisis are finally finding
interested buyers amid a wider mergers-and-acquisitions boom.
Analysts have speculated that Findus Group Ltd., another of the
world's largest frozen-food companies, could be next on the block.
Findus has been owned by Lion Capital LLP since 2008, although Iglo
has owned the Findus brand in Italy since 2010.
Despite the apparent availability of assets, Nomad won't have
things all its own way. Sales growth in packaged foods has slowed
in the U.S. and Europe over the last decade as consumers have opted
for fresher alternatives. Iglo--best known in the U.K. for creating
the Captain Birdseye character, a bearded seafarer who for decades
appeared on packs of frozen fish fingers--saw its sales fall 2% in
2014.
Another problem: Companies like Unilever and Nestlé aren't
selling their best assets. Many of the brands on the block are
losing sales and, crucially, don't chime with consumers
increasingly looking for freshness or low calorie counts.
Switzerland's Nestlé, the world's biggest food company by sales,
earlier this month said it is in negotiations to sell its Davigel
frozen-food business to the U.K.'s Brakes Group Ltd. Davigel is
part of Nestlé's troubled prepared-foods division, which posted a
drop in sales in 2014. In the last two years, Unilever has sold a
raft of underperforming food brands, including Ragú and Bertolli
pasta sauces, Skippy peanut butter and Wish-Bone salad
dressing.
But Nomad's owners aren't concerned by the prospect of buying
unfashionable brands. Mr. Gottesman, 53, who co-founded hedge fund
GLG Partners Inc. in 1995, said Nomad was happy to buy into "niche
markets" so long as the brands were sold across multiple
geographies and generated a lot of cash.
"There are plenty of assets out there that could benefit from a
permanency of ownership," he said.
Write to Peter Evans at peter.evans@wsj.com
Access Investor Kit for NESTLE SA ORD REG
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=CH0038863350
Access Investor Kit for Jarden Corp.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US4711091086
Access Investor Kit for NESTLE SA ORD REG
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US6410694060
Subscribe to WSJ: http://online.wsj.com?mod=djnwires