Unilever, the consumer products group which missed market second-quarter proft expectations earlier this month, has made €1bn (£680 million) selling its Iglo and Birds Eye frozen foods businesses to private equity group Permira for €1.73 billion.

The Sunday Times reported yesterday that Permira were poised to clinch the deal.

Permira knocked out Findus frozen foods-owner CapVest, which was among the favourites of the private equity groups to take the deal. Other bidders included Blackstone Capital Partners, Kerry Group and JPMorgan Partners. Goldman Sachs conducted the auction.

The makers of Knorr soup and Dove soap got a price equal to 1.4 times annual €1.24 billion revenue and 9.9 times earnings before interest, taxes, depreciation and amortization.

Jan Meijer, an analyst at Theodoor Gilissen in Amsterdam, told Blomberg: "The price is better than expected. The question is, what they will do with the proceeds?''

Unilever's Dutch shares, which have declined 4.7 per cent this year, rose 10 cents, or 0.5 percent, to €18.47 in early trading in Amsterdam. The London market is closed for the Bank Holiday.

Unilever chief executive Patrick Cescau has been getting rid of underperforming divisions as Unilever struggles to catch up with rivals including Nestle, the world's largest food company, and rival Reckitt Benckiser.

Industry sources now expect Permira to approach CapVest to buy its Findus frozen foods in Norway, Sweden and France and put them together with the Unilever's businesses to form a company with revenues of €3 billion. CapVest also owns Young's Bluecrest Seafood in the UK.

Unilever said in February that it would sell Birds Eye and Iglo in Europe. Sales at the company's western European frozen-foods unit fell last year.

Unilever's profit rose 35 percent to €986 million in the second quarter to June, less than analysts had estimated. Sales advanced 3.3 per cent, trailing the 25 per cent increase reported by Procter & Gamble, the largest U.S. consumer-products company, and the 3.4 per cent gain at Kraft Foods, the world's No. 2 food company.

Rob Mann, analyst at Collins Stewart, said at the time: "We think the Unilever management is under pressure. The confidence it claims to feel does not appear to be grounded in anything particularly tangible."

Unilever has already drawn comparison with HJ Heinz, the lumbering American foods giant, whose board is being pressured by activist investors.

The Sunday Times reported two weeks ago that the £15.5 billion Anglo-Dutch giant had secretly axed 25,000 jobs in 10 months, equal to 10 per cent.

The cuts reduced the group's workforce to 200,000, but analysts still believe that Mr Cescau has room to take out more jobs, particularly amoung senior management.

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