Greencore to acquire US convenience food company for almost €700m

Greencore Group plc, has announced that it is to acquire US company Peacock Foods for $747.5m (€694m).

Peacock Foods is a fast-growing US convenience food manufacturer with strong positions in frozen breakfast sandwiches, kids’ chilled meal kits and salad kits, according to Greencore.

In the year to September 2016, the company generated revenues of approximately $1 billion and adjusted EBITDA of $72.1m (€66.9m)

The combined business has the potential to transform Greencore’s market and channel position in the US and create a strong platform for long term profitable growth.

Commenting on the acquisition, Greencore’s CEO, Patrick Coveney said that theacquisition of Peacock will transform Greencore’s US business, strengthen its position in high growth categories, broaden its channel and customer exposure, and add significant scale to its 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.

“We are delighted to welcome the Peacock team into the Greencore Group.”

Tom Sampson, Peacock Foods CEO, added that the company has been particularly struck by the similarities in the way we run their business and their mutual long-term commitment to the US convenience food market.

“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.”

Peacock has deep, long-standing relationships with consumer packaged goods (CPG) leaders including Tyson Foods, KraftHeinz and Dole.

The company is headquarted in Geneva, Illinois, and operates from seven large well-invested facilities with a track record of quality and safety, and expertise in automation, project engineering and packaging.

The new US division (which, after completion, will include Peacock) will be led by the CEO of Greencore’s US division, Chris Kirke.

Sampson, Peacock’s CEO, will be appointed as a senior advisor to Greencore with particular responsibility for managing customer transition and integration over the next two years.

The new management team will be made up of members of both Greencore’s and Peacock’s current senior management teams, with the key members identified and in place.

The acquisition and related expenses will be financed through a combination of a fully underwritten rights issue offered to qualifying shareholders to raise a total of £439.4m (€510m)and new debt facilities aggregating approximately £200m (€232m).

Greencore results

Meanwhile, Greencore also announced its preliminary results for the year ended September 30, 2016.

The Group reported revenues of £1,481.9m (€1,721m), up 10.6%, as reported, and revenues were up 5.9% on a like-for-like basis.

Convenience Foods revenues stood at £1,435.2m (€1,667m), for the year to September, up 6.6% on a like-for-like basis.

The Group reported continued strong momentum across UK and US food to go activity with 10.5% like-for-like revenue growth, well ahead of market performance.

Greencore CEO Patrick Coveney said that this has been another year of strong performance for Greencore, and these results should be seen as a clear indication that its strategy of focusing on the UK and US Convenience Foods markets is 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.”