Bonduelle buys Unilever's frozen foods unit

Unilever has announced the sale of its remaining Spanish frozen foods brands to French food group Bonduelle.

The sale, which took place on 1 July, involved food brands Salto and Knorr. Unilever has not revealed the agreed price, but it is thought to be several million euros.

Bonduelle had acquired the mainstay of Unilever's Spanish frozen food brands five years ago, when it was agreed the firm would have first choice on Unilever's divesture of the remaining brands.

Last month Bonduelle acquired a 13 per cent stake in Canada's largest frozen and canned vegetable company Aliments Carriere, as the firm moves to position itself as a leading global frozen foods provider. Under the agreement, Bonduelle will gradually increase its stake to 25 per cent by October 2006.

Unilever's whole European frozen foods business, which has been up for sale since February this year, is worth an estimated £1bn. It has attracted a number of private equity firms and companies including Lion Capital, CapVest and Blackstone.

Goldman Sachs is overseeing the sale, which should be completed by the end of the year.

Although the frozen foods division has annual sales of around £1.4bn, it has been underperforming in recent years as European consumers opt for fresher alternatives.

The Anglo-Dutch firm will sell the business to concentrate on staple brands such as Hellman's mayonnaise, as spiralling production costs and falling sales continue to shrink profit margins. The divesture is part of Unilever's five-year plan to cut its portfolio of brands from 1,600 to 400.

"Deciding to put the majority of our European frozen food business up for sale has been a tough call. It has been a successful business for us over many years, we've built some great brands for consumers with memorable advertising," said Patrick Cescau, Unilever's chief executive.

"However, although we have made great progress in increasing profitability, in recent years growth has been harder to come by. After an exhaustive review we have decided that the best way for us to create value is by selling the majority of the European frozen food businesses."

Unilever operates the frozen foods division in 11 EU countries, including France, Germany, Italy, Holland the UK. It has five sourcing units across Italy, Germany and Britain.

The firm, famous for Ben and Jerry's ice cream and Coleman's mustard, will hold on to the Italian portion of the business, using it as a testing base for American frozen products.

"It is our biggest single business in Italy and its retention plays an important role in future trade relations in that country. It is also an important source of innovation and technology in the attractive frozen meals segment that is proving so successful in the US," Cescau said.