Posted on 12 July 2011.
Greencore has made a recommended £113m cash offer for Uniq to significantly strengthen its position within the UK convenience foods market, chiefly within the food to go and chilled desserts categories. The acquisition of Uniq will add new and complementary customer relationships to Greencore, in particular with Marks & Spencer. The acquisition is being funded through a fully underwritten 5 for 6 rights issue at Eur0.46 per share to raise approximately Eur80.2m, and a new debt facility.
Uniq is owned by its Pension Scheme. This follows a deal last February when Uniq’s pension debt of more than £400m was exchanged for a 90.2% stake in the group.
In its last financial year, Uniq continued the improvement in its performance by increasing turnover by 6.8% to £312m and reporting an operating profit before significant items of £4.1m compared to a loss of £1.9m in 2009. The food to go business increased sales by 13% to £157m and profits by 51% to £11m. Uniq’s desserts sales rose by 1.5% to £155m and losses were reduced by 6.9% to £2.7m.
Patrick Coveney, chief executive of Greencore.
Greencore is projecting annual net cost synergies of at least £10m for the acquisition through the elimination of duplicated corporate, divisional and functional overheads, and the overlapping nature of the respective supply chains.
Greencore expects the acquisition and associated financing, including the rights issue, to deliver mid-single digit (percentage point) adjusted earnings per share accretion in the financial year to end September 2012 and to be significantly accretive in years thereafter.
“The proposed acquisition of Uniq delivers demonstrable further scale in two key categories – food to go and chilled desserts, and is underpinned by substantial synergies. Furthermore, it broadens Greencore’s commercial footprint and it is perfectly aligned to our strategy,” says Patrick Coveney, chief executive of Greencore. “It represents an important milestone as we extend the scale and leadership positions of our group in the UK convenience market.”
Geoff Eaton, chief executive of Uniq, comments: “It is a good offer from a strong business that provides an excellent strategic fit and, as such, represents the best outcome for employees, pension members and shareholders, as well as an exciting opportunity for Greencore. The Uniq team has done an exceptional job over the past two years to find a solution to Uniq’s pension scheme issues, whilst continuing to deliver a high quality service to our customers. As a result, the building blocks are in place for the Uniq businesses to realise their full potential with a committed, long-term owner, such as Greencore.”
Of course, Greencore failed earlier this year in its efforts to achieve an all-share merger of equals with Northern Foods, when its bid was trumped by Boparan Holdings with a £342m cash offer.