Greencore to Divest US Business in $1 Billion Deal
Greencore Group, the Irish and UK convenience food business, has agreed to sell its entire US business to an affiliate of Hearthside Food Solutions for US$1.075 billion (£817 million) on a cash and debt-free basis. Hearthside is a major US contract food manufacturer with a heritage in US food industry outsourcing. The disposal will leave Greencore focused on the UK convenience food market where it holds leadership positions,
Net proceeds of about £802 million will allow Greencore to declare a special dividend of 72 pence per ordinary share, representing an aggregate amount of £509 million in cash, to shareholders as soon as practicable following completion. The transaction will also support a strengthened balance sheet, with up to £293 million to be used to reduce leverage, and a target medium term leverage range of 1.5-2.0x Net Debt/EBITDA
Patrick Coveney, chief executive of Greencore, commented: “We believe that the proposed sale of our US operation represents a compelling and immediate realisation of value for Greencore’s shareholders. We have always had a firm conviction on the underlying value and growth prospects of our US business and believe that this offer fully reflects that. Looking ahead, we are confident that we can deliver further growth and returns in the dynamic UK market. The proposed transaction would enhance our strategic and financial flexibility, which would allow us to build on our industry-leading position in our core UK market whilst also taking advantage of emerging organic and inorganic growth opportunities.”
Completion is expected by late November 2018, conditional on approval of Greencore shareholders and US HSR clearance.
