The deal has the potential to “transform Greencore’s market and channel position in the US and create a strong platform for long-term profitable growth”, according to the business.
Peacock Foods was said to have strong positions in frozen breakfast sandwiches, children’s chilled meal kits and salad kits. The business reportedly generated revenues of about $1bn in the year to September 2016. Adjusted earnings before interest, tax, depreciation and amortisation were £57.69M ($72.1M).
Transform the firm’s US business
Greencore ceo Patrick Coveney said the deal will transform the firm’s US business, strengthening its position in high growth categories, while broadening channel and customer exposure. The acquisition will also add significantly to the scale to Greencore’s operations.
“We believe Peacock’s success is built on the same fundamental strategy and values that drive Greencore, making products that consumers love, building deep, longstanding relationships with customers, investing in high quality manufacturing capacity, food safety capability and, most importantly, people,” said Coveney.
Peacock Foods ceo Tom Sampson was “thrilled” to be joining. “We have been particularly struck by the similarities in the way we run our business and our mutual long-term commitment to the US convenience food market,” said Sampson.
“We are excited by the opportunity that we now have to leverage Greencore’s expertise in innovation and fresh food manufacturing, thereby bringing a broader set of capabilities to our customers.”
‘Innovation in fresh food manufacturing’
The acquisition will be funded by a fully underwritten rights issue offered to qualifying shareholders to raise £439.4M, together with new debt facilities of about £200M.
The deal was expected to deliver a significant improvement in earnings with a targeted return ahead of cost of capital from the first full year of ownership.
Greencore planned to form a new US division, which will be led by Chris Kirke, with the title ceo US division.
Sampson will be appointed as a senior adviser to Greencore with responsibility for managing customer transition and integration over the next two years. A new management team will be appointed, composed of senior members of the current management teams at Greencore and Peakcock.
Meanwhile, Greencore reported group revenue 10.6% up to £1,481.9M in preliminary, unaudited results for the year ended September 30 2016. Like-for-like revenues were 5.9% up. See the box below for more details.
Greencore boss hails ‘another year of strong performance’
Greencore ceo Patrick Coveney has hailed “another year of strong performance”, after the business posted group revenue 10.6% up to £1,481.9M in preliminary unaudited results for the year ended September 30 2016.
Convenience Foods revenue reached £1,435.2M, up by 6.6% on a like-for-like basis. Group EBITDA was 13.9% up to £138.4M.
Coveney said the results should be seen as a clear indication that Greencore’s strategy of focusing on the UK and US convenience foods markets was continuing to work well. “In the UK, we have delivered substantial like-for-like growth against the backdrop of a challenging retail market and an uncertain economic environment, and in the US we now have a business that is primed to deliver sustainable, profitable growth,” said Coveney.
“Given the underlying commercial momentum across the group, our strong market positions, the transformational acquisition of Peacock Foods in the US that we have announced separately today, and our recent new business wins, we are confident about Greencore's future prospects.”