CAPTAIN BIRDS EYE is this weekend poised to drop anchor in a new harbour. Permira, the private-equity group, is close to a £1 billion deal to buy the frozen-foods business from Unilever.

Permira is understood to have entered exclusive negotiations with Goldman Sachs, the investment bank handling the sale, late on Friday.

Although it remains possible that the talks could collapse, an agreement to take over the business with sales of €2 billion (£1.4 billion) could be announced as early as tomorrow.

If the deal is completed, it would hand Permira ownership of some of Britain’s best-known food products, including Birds Eye fish fingers and frozen vegetables.

The deal would end a 63-year association between Unilever and the Birds Eye brand and follow a six-month sale process that attracted interest from some of the world’s largest buyout firms. Unilever and Permira both declined to comment.

Unilever kicked off a review of its European frozen-food assets last autumn amid concern that the business was lagging behind faster-growing businesses in the Anglo-Dutch group’s stable.

The business being sold, which also includes the Iglo brand, consists of operations in 10 European countries, including France, Germany, Greece and the Netherlands, as well as Britain, and employs about 3,500 people. Unilever’s frozen-food portfolio in Italy is being retained by the company because it is understood to have stronger growth potential than the rest of Europe.

Permira, which is an investor in businesses as diverse as the AA, the gambling firm Gala Coral and the corporate travel provider Hogg Robinson, is understood to have seen off competition from bidders including Capvest, the owner of Findus, and a consortium of Blackstone, JP Morgan Partners and Kerry Foods, the Irish food group. Permira is being advised in the talks by investment bank Lehman Brothers.

It remains possible that one of the rivals could re-enter talks if Permira fails to close the deal.Capvest was seen as frontrunner to buy the business after boosting its chances by recruiting two other buyout firms to its bid, but both walked away amid anti-trust concerns and fears about the long-term outlook for frozen food.

Consumers are turning from frozen foods to fresh and chilled products, a move that is forcing rapid innovation among manufacturers. Other British food-makers, such as Northern Foods, are undergoing radical restructuring as they adapt to market trends.

• Bidders for United Biscuits, the owner of Jaffa Cakes and Hula Hoops, are holding talks with the company’s pension trustees about its estimated £200m deficit. A consortium of Premier Foods, Lion Capital and NPM Capital is bidding against Blackstone for the firm.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive