Greencore Group plc (“Greencore” or the “Group”) a leading convenience food business, today announces that it has entered into an agreement for the sale of its entire US business (“Greencore US”) to an affiliate of Hearthside Food Solutions LLC (“Hearthside”) for US$1,075 million (£817 million)1 on a cash and debt-free basis (the “Transaction”).
TRANSACTION HIGHLIGHTS
- Transaction EV / EBITDA multiple of 13.4x/14.2x2,3, representing a compelling and immediate realisation of value
- Hearthside is a scale US contract food manufacturer with a heritage in US food industry outsourcing
- Net proceeds of c.£802 million will allow for 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 of the Capital Reduction and the Lender Consent/Refinancing
- 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
- Post-Transaction, Greencore will have a leading position in its core UK market, greater financial and strategic flexibility, and potential for dynamic capital management
- Completion expected by late November 2018, conditional on approval of Greencore shareholders and US HSR clearance
GREENCORE AS A FOCUSED UK CONVENIENCE FOOD LEADER
Following the Transaction, the Board believe that the Retained Group will be well positioned with the focus, team, and flexibility to drive growth and returns. Post-transaction, the Group intends to:
- extend its leadership position in attractive categories and formats within the structurally growing convenience food market
- deepen its long-term partnerships with customers
- execute a number of value-creating initiatives in a dynamic and changing UK marketplace
- focus the organisation on UK opportunities with a strong team of leaders with industry-leading experience and expertise across strategy, commercial, manufacturing, technical/food safety and people development
- drive sustained growth, returns and cash flow for its Shareholders
Commenting on the Transaction, Greencore’s CEO, Patrick Coveney, said:
“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.”
The Transaction is of sufficient size relative to the Group to constitute a class 1 transaction for the purposes of the Listing Rules and the Transaction is therefore conditional upon the approval of Shareholders. Accordingly, an Extraordinary General Meeting (“EGM”) of Greencore is to be held at The Westin Dublin Hotel, College Green, Westmoreland Street, Dublin, D02 HR67 at 10.00 a.m. on 7 November 2018 for the purposes of approving the Transaction.
If Completion of the Transaction occurs, and subject to the occurrence of the Lender Consent/Refinancing and the Capital Reduction, it is the Board’s intention to declare and pay a Special Dividend of 72 pence per Ordinary Share representing an aggregate amount of £509 million in cash. At the EGM Shareholders will also be asked to vote on a number of proposals intended to give Greencore the flexibility to implement the Special Dividend and an accompanying customary Share Consolidation.
A shareholder circular (the “Circular”) containing further details of the Transaction and including the notice of the EGM will be sent to shareholders following approval by the UK Listing Authority, (expected later today), and will be available for inspection at www.greencore.com. A summary expected timetable of principal events is set out in Appendix I to this Announcement.
CURRENT TRADING
- Reiterating previously announced Adjusted EPS range of 14.7p-15.7p for FY18
- Completed disposal of Rhode Island facility for additional cash consideration of $10.8m in FY18
- FY18 Results will be issued on 4 December 2018
