KERRY FOODS, Ireland’s largest food company, has teamed up with two private-equity firms in an attempt to muscle its way into the £1.2 (€1.75) billion auction of Captain Birds Eye.

Kerry is understood to be in talks with Blackstone and JP Morgan Partners about forming a three-way consortium to bid for Unilever’s frozen foods arm.

Kerry Foods is Ireland’s eighth-largest quoted company with a market capitalisation of €3.1 billion, having grown from humble beginnings as a small farmers’ co-operative.

The group has extensive food ingredients interests in America and is one of the largest suppliers of chilled ready meals into the British supermarket multiples. Last August, it paid the private equity firm Bridgepoint £124m for Noon, a London maker of Indian and Thai ready meals founded by Sir Gulam Noon.

Kerry chief executive Hugh Friel, who took over from longtime boss and stock market darling Denis Brosnan in 2001, is under pressure from shareholders following a profit warning last May and an ill-judged share buy-back that has failed to lift Kerry’s flagging stock price.

The consortium that Kerry is set to join is pitted against three other private-equity bidders in the Unilever auction, which is being handled by Goldman Sachs, the investment bank.

Capvest, the owner of Findus and Young’s Bluecrest, the frozen seafood group, has joined forces with CVC and Kohlberg Kravis Roberts to table a bid, on which Deutsche Bank and Merrill Lynch are advising. PAI and Permira have also made separate offers for the business.

None of the bidders would comment this weekend.

Unilever decided to sell its frozen foods business after years of underperformance. Sales dipped 4.5% last year, as consumers shunned frozen foods in preference for chilled ready meals.

Some £60m was spent revamping the Birds Eye brand two years ago, getting rid of the seagull logo and emphasising the use of natural ingredients or preservatives, but the rebranding failed to halt the sales decline.

A strategic review of the business was conducted last September, followed by a decision to exit the business. Unilever is nearing the end of programme to cut the number of its brands from 1,600 to 400.

A move into frozen foods would represent a big shift for Kerry, itself a leading player in the chilled meals area, but the group may look to develop the Unilever brands.

Unilever has frozen food portfolios in 11 countries, including the German brand Iglo and Birds Eye. The giant food group sold its Spanish frozen food brands to Bonduelle earlier this month.

The dash out of frozen foods has not been limited to Unilever. Heinz also attempted to sell its frozen food division earlier this year, but pulled the sale after it failed to achieve the required price.

Kerry’s share price has been under pressure since last May, when Friel told the group’s annual general meeting that energy cost inflation, the weakening dollar and the volatility of raw material price could affect earnings. The group has bought back a total of 2.8m shares since then. The shares are currently trading at their lowest levels for two years.

Bidders for the Unilever brands will have until the end of August to submit final offers for the company.

Capvest is seen as the leading bidder. Its consortium is headed by Martin Glenn, a former president of PepsiCo’s British operations. Glenn was credited with making Walkers one of Britain’s leading brands.