Greencore cool on Uniq rumours
The Telegraph said that Dublin-based Greencore was working with advisors at Barclays Capital to examine consolidation options that could see it acquire either all or part of the company.
A Greencore spokesman refused to comment on the speculation, but Evolution Securities analyst Alex Sloane told FoodManufacture.co.uk that the news, if true, would come as no surprise: “When Greencore missed out on Northern Foods it expressed a clear desire to consolidate within own-label convenience foods.”
Lack of interest in Uniq?
However, Sloane said he doubted whether any other UK publicly listed companies would be interested in Uniq, while Julian Wild, corporate finance partner, Rollits, said that problems with the firm's everyday desserts business and the Minsterley site in particular risked deterring buyers.
"£100m sounds like an awful lot of money to me," said Wild. "I'm fairly confident Greencore are having a look at Uniq. It's pretty obvious to do so given its size in the sandwich business and involvement with [key customer] M&S. Do I think they'll be put off by the problems at Minsterley? Yes, if they've got any sense."
Greencore would be unable to simply acquire Uniq's profitable 'food to go' arm (which includes sandwiches and salads) alone, Wild said, given that the pension trustees are only interested in selling the whole business on an all or nothing basis, and don't want to be left with unprofitable parts.
Brookes/Avana
Sloane also identified another possible target in Greencore’s sights: “Uniq is one option, Premier Foods’ own-label business RF Brookes and Avana Bakeries [which saw profits nosedive from £15m to zero in 2010] is another.”
The latter route would also enable Greencore to build a relationship with M&S, given that current key customers include major multiples Asda, Tesco, the Co-operative Group, Morrisons and Sainsbury's.
Damian McNeela, analyst, Panmure Gordon agreed that a Greencore move for Uniq was possible, given the Irish firm’s publicly stated appetite for acquisitions.
McNeela added that Premier Foods’ willingness to consider offers for Brookes/Avana made “perfect sense”, although the firm is not actively marketing it for sale as such.
Under investment
Sloane told this publication in February that a £150m offer could tempt Premier to sell, but that it made sense to restore profitability to achieve a higher price, given that 2010 sales fell 4.7% and had suffered from under-investment as the company drove brands such as Hovis.
Asked whether it made sense for Premier to welcome offers now, rather than improve the business, McNeela said it depended on how long any sale took, given that the firm is not actively marketing Brookes/Avana for sale.
“They would get a better sale price if they improved its operational performance, but it obviously also depends on what people are prepared to pay,” he said.
Wild said: "It depends how much Premier are prepared to sell it for. Broadly speaking it's private label ready meals and cakes, and it's not making any money."
He added that the £150m price tag was mooted a couple of years ago when Premier tried to sell Brookes/Avana, and it didn't manage to sell the business at this price: "Since then it's gone backwards quite some way and continues to lose business. Premier needs to take a realistic view on price, since I can't see them getting anywhere near that figure [£150m] now."
