UPDATE 1-Unilever to sell Italian frozen foods-sources

* Unilever to sell Findus Italy business

* Private equity groups line up as buyers

* Analysts value business at 600-700 mln euros

(Adds further details and background)

By David Jones and Simon Meads

LONDON, April 19 (BestGrowthStock) – Consumer goods giant Unilever
Plc/NV is set to put its Italian frozen foods unit up for sale
next week with private equity groups Permira and Lion Capital
likely to lead the 600 million euro-plus ($839 million-plus)
auction, sources close to the situation said on Monday.

Permira [PERM.UL], which owns Birds Eye Iglo, and Lion
Capital which runs Findus Group are expected to lead bidding for
the Unilever (ULVR.L: ) (UNc.AS: ) business, which analysts have
priced at 600-700 million euros.

“We expect the information memorandum to go out next week
and kick-off the auction process,” said one source with
knowledge of the situation.

BC Partners [BCPRT.UL], which owns French frozen food
distributor Picard, intends to participate in the process, a
separate source familiar with the matter said.

Also eyeing the business is French private equity house PAI
Partners, which counts United Biscuits and Yoplait among its
current portfolio companies, the source added.

Europe’s frozen food industry has struggled to achieve sales
growth as consumers opt for fresh and chilled products, and its
response has been to consolidate to cut costs while looking to
new products and promotions to try and kick start growth.

Unilever lost patience with trying to find growth from its
frozen food European business selling Birds Eye Iglo to Permira
in 2006 for a mouth-watering 1.7 billion euros, but kept its
Italian business due to its close links to its ice-cream unit.

Permira fought off interest at the time from another private
equity group CapVest, which owned the Findus Group, but after
losing out CapVest went on to sell Findus for 1.1 million pounds
($1.77 million) to Lion Capital in 2008.

Unilever’s business up for sale is called Findus Italy, but
has no link to the Findus Group which was originally owned by
the world’s biggest food group Nestle (NESN.VX: ) before moving
into private equity hands. It markets frozen ready-meal dishes
as well as fish and vegetables products.

Analysts at brokers Jefferies International estimate Findus
Italy makes annual earnings before interest, tax, depreciation
and amortisation of 65-75 million euros and could fetch a price
tag of around 600-700 million euros.

The disposal will cut Unilever’s dependence on slower
growing and commoditised food businesses in Europe, and together
with its purchase of Sara Lee’s (SLE.N: ) personal care
operations, with brands like Radox and Sanex, in September will
help boost overall growth in its sluggish European business.

Chief Executive Paul Polman took over at Unilever at the
start of 2009 and has put the focus clearly on reviving sales
volume growth rather than cost cutting and relying on price
rises to drive growth.

Some believe Polman’s predecessor at Unilever Patrick Cescau
should have sold the Italian unit back in 2006 with the rest of
the European frozen foods business.

“Unilever should have sold it then, they would have achieved
a better multiple for it. The link with the ice-cream business
was overstated,” said another source.

Unilever and the private equity groups all declined to
comment.

Unilever Plc shares were off 0.4 percent at 19.20 pounds by
1445 GMT broadly in line with a lower UK stock market.

Stock Market Money
(Additional reporting by Victoria Howley)
(Reporting by David Jones and Simon Meads; Editing by Kate
Holton)

UPDATE 1-Unilever to sell Italian frozen foods-sources