Greencore exits cake and desserts sector

29-Jan-2018 - Last updated on 29-Jan-2018 at 14:01 GMT

Greencore sells Hull cakes business

Greencore Group, the international convenience food business, has revealed it is to exit the UK cake and desserts sector with the sale of its Hull business to Bright Blue Foods (BBF), the venture-capital-backed ambient cake manufacturer.

The announcement was made the day before Greencore was due to release its first quarter trading for the 13-week period to December 29 2017.

The price of the deal was not disclosed.

Greencore’s Hull businesses produces own-label cakes for a number of retailers, including Marks & Spencer and Asda.

Jobs go at Evercreech

Last year, Greencore revealed that 400 jobs were to go at its chilled desserts factory in Evercreech, Somerset. Greencore is headquartered in Dublin and employs approximately 16,000 people in 31 manufacturing facilities across the UK and the US.

BBF was acquired in September 2015 by the private equity investor Endless, via its fourth fund. The purchase will mean that the combined company will have turnover in excess of £140M a year and employ over 2,000 people across five sites.

Completion of the sale is expected in early February 2018 following a Transfer of Undertakings Protection of Employment consultation process with Greencore Hull employees.

The Hull site will trade under the name of BBF (Hull) Ltd and will be led by Jonathan Lill as ceo.

'Transformational'

Lill said: “This is a really exciting time for our company, our people and our customers. The product range and customer base from both businesses are very complementary. BBF is entirely focused on the bakery sector and this acquisition will be transformational for our business. We are committed to continue to invest in the category and deliver great quality, service and innovation to our customers.”

Richard Harrison, investment director at Endless, said: "We have assembled an outstanding management team at BBF, led by Jonathan. This acquisition will double the size of BBF and will enable the business to maximise opportunities in this category through its enhanced product offering and scale.

“We are delighted to support BBF with this deal, which once again showcases our expertise in acquiring non-core assets from large corporates and is a great way to start 2018.”

'Non-core'

Shore Capital analyst Clive Black said the deal had not come as a surprise as the business has been “peripheral” and “non-core” to Greencore.

“Ambient cakes and desserts has been a low-margin area of the business,” he told FoodManufacture.co.uk.

He said it was likely that the deal with BBF was for a “relatively low price paid” as the business would have not been been generating much profit.

He added: “The buyer is owned by private equity that focuses on turnarounds so I think it has gone to a good home.”