August 18, 2015 / 10:50 PM / 4 years ago

Nomad Foods looks for U.S. acquisitions of frozen food brands

Aug 18 (Reuters) - Nomad Foods Ltd, a frozen foods company which gets most of its revenue from Europe, plans acquisitions in the United States where it believes it can find good bargains as consumers increasingly eat fresh foods and shy away from TV dinners, the company’s chief executive said in an interview.

The company wants to buy neglected frozen food brands on the cheap and breathe new life into them, Nomad Chief Executive Officer Stefan Descheemaeker told Reuters on Monday.

He said Nomad is looking to buy a U.S. company that has a strong management team, which would help it make more acquisitions, a playbook Nomad followed in Europe.

In June, Nomad closed on its 2.6 billion euro ($2.88 billion) purchase of Iglo Foods Holdings Ltd, which sells Birds Eye brand frozen vegetables in Europe and Findus branded frozen fish in Italy. Nomad announced on Aug. 13 that it is buying Findus Group Ltd for 500 million pounds sterling ($781.6 million).

Nomad’s strategy comes from one of its co-founders, Martin E. Franklin, who started consumer product company Jarden Corp. Jarden sells everything from Bicycle playing cards to Sunbeam toasters, and was built piece by piece: Franklin bought out-of-favor brands, cut costs, and poured the savings into research and marketing, to improve products and boost sales, Descheemaeker said. Nomad’s other co-founder, Noam Gottesman, was also a co-founder of hedge fund GLG Partners.

Franklin and Gottesman set up Nomad as a special purpose acquisition vehicle in 2014, a company that raises money in an initial public offering before it has any operating businesses.

Descheemaeker declined to comment on assets that Nomad may bid on in the United States.

But industry sources said that the company’s targets may include Bellissio Foods, which is owned by private equity firm Centre Partners and sells foods under brands including Boston Market and Chili’s at Home, or Green Giant, owned by General Mills. The sources asked not be identified because the matter is confidential.

One issue the company will have to address as it turns around brands is consumers’ perception that frozen food is less fresh and healthy. Sales of pre-made frozen meals have fallen in recent years.

“The quality (for frozen food) is much better than perception” Descheemaeker said. But consumers’ doubts about frozen foods allow Nomad to buy assets at low prices, he said.

Nomad usually looks to pay about 9 times a measure of cash flow known as earnings before interest, taxes, depreciation, and amortization on deals, but recognizes that it may have to pay more for some assets in the United States. The company is open to buying other types of consumer companies if the price and opportunity is right, Descheemaeker said.

Nomad’s biggest competitor for food acquisitions in the United States is Pinnacle Foods, which owns brands including Vlasick Pickles and Bird’s Eye frozen vegetables in the country.

“Our strategy is not dissimilar,” Descheemaeker said of Pinnacle Foods, “and that’s nothing to be ashamed of.” (Reporting by Lauren Hirsch; Editing by Grant McCool)

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