Greencore agrees to sell malt unit
Greencore agreed to sell its malt business to France’s Axereal Union de Cooperatives Agricoles for as much as €116.25m to focus on its core convenience-foods unit and pay down debt.
The sale will reduce debt by about 32pc from the September 2009 level, the company said today in a Regulatory News Service statement.
Greencore, which said in a separate statement it made a “strong” start to 2010, rose as much as 5.3pc in Dublin trading.
Greencore, whose sandwiches and chilled meals are sold by UK supermarkets including Tesco, has exited its frozen desserts business and sold its bottled water unit as part of an overhaul.
The company said in October it received a number of unsolicited approaches for the malt unit.
“The sale reduces our net debt but it also allows us to focus on our core convenience-foods business,” Finance Director Geoff Doherty said in a telephone interview.
Greencore gained 4 cents, or 3pc, to €1.37 at 8:45am in Dublin, giving the company a market value of €281.8m.
The malt unit, which includes businesses in the UK, Ireland and Belgium, had revenue of €217.2m in 2009 and operating profit before interest and tax of €20.5m. Axereal is a French cooperative formed last year through the merger of Agralys and Epis Centre, Greencore said.
The sale will strengthen Greencore’s balance sheet and provide capital to fund growth in the UK and US convenience-food markets, Chief Executive Officer Patrick Coveney said in the statement.
Greencore moved into the US in 2008 with the purchase of Home Made Brand Foods Inc.
Greencore also said it’s “confident” about its prospects in the year ahead and beyond.
“Although encouraged by our recent trading performance we remain appropriately cautious about the consumer environment for the remainder of the year,” the company said.