Convenience foods giant Greencore has announced the planned sale of its US operations to an affiliate of Hearthside Food Solutions, for £817 million (€926 million) on a cash and debt-free basis.
The transaction is at an EV/EBITDA multiple of 13.4x/14.2x2,3, which Greencore said represents a ‘compelling and immediate realisation of value’.
Net proceeds from the sale, of £802 million, will lead Greencore to declare a special dividend of 72 pence per ordinary share (totalling £508 million) to its shareholders.
Strengthened Balance Sheet
The group said that the transaction will ‘support a strengthened balance sheet’, with up to £293 million of the proceeds set to be used to reduce leverage.
‘Post-transaction, Greencore will have a leading position in its core UK market, greater financial and strategic flexibility, and potential for dynamic capital management,’ the company said in a statement.
Completion of the deal is expected by late November 2018, following shareholder and competition approval.
Compelling Offer
“We believe that the proposed sale of our US operation represents a compelling and immediate realisation of value for Greencore’s shareholders,” said Patrick Coveney, Greencore chief executive.
“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.”
Coven added that the proposed transaction will “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.”
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.
