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Greencore buyout plan 'will hinge on fundraising'

GREENCORE will have to raise more capital if it is to take over the UK sandwich maker Uniq, analysts said yesterday.

The Irish firm, which lost out on a merger with the UK's Northern Foods earlier this year, has entered the first round of bidding for the company, which supplies sandwiches to Marks & Spencer (M&S). Uniq has an estimated price tag of £100m (€112m).

Analysts were generally positive on the deal but warned a round of fundraising was inevitable if Patrick Coveney's firm paid £100m for Uniq.

Bloxham Stockbrokers said Uniq "offers exposure to retailers such as M&S, while offering scale opportunity", but warned equity finance would be required.

"Greencore's net debt to earnings before interest, tax, depreciation and amortization ratio is currently 2.8, excluding its pension deficit. (This deal) would bring that metric to 3.9.

"If a deal like this is to take place, it is inevitable, in our view, that equity finance will be needed."

NCB's Conor Hartnett agreed extra financing was needed.

"By acquiring Uniq, Greencore (would) consolidate its position with the main UK retailers in the food-to-go segment. Greencore has very little exposure to M&S -- something this deal would remedy. However, funding the deal will be a challenge and paying £100m before rationalisation costs may be too expensive for Greencore to afford.

"It's highly probable Greencore would need to raise equity to fund the deal," he said.

Uniq, formally known as Unigate, supplies sandwiches to Marks & Spencer as well as making salads and other light snacks. Last year it recorded an operating profit of £4.1m on revenue of £311.9m.

The company was put up for sale by its pension trustees two months ago. The pension fund took control of the company last year in a bid to erase a ruinous pension deficit from the books.


In December, the deficit was separated from the company following a buyout by an insurance company.

Greencore declined to comment on the possible sale.

Greencore has been mooted as a possible suitor for Uniq since the merger with Northern Foods collapsed in March.

The Santry-based company had agreed terms to merge with Northern to create a new company but that deal was hijacked by Bolton businessman Ranjit Boparan, who ultimately took Northern private in a £342m deal. Costs from the deal pushed Greencore into loss for the first half of the year.

Greencore closed down marginally at €1.11.

Irish Independent