Greencore to Acquire Uniq for £113 million

Coveney: “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."

7/13/2011 --- Greencore and Uniq have reached agreement on the terms of a recommended cash offer to be made by Greencore Foods, a wholly owned subsidiary of Greencore, for the whole of the issued and to be issued share capital of Uniq.

The Offer values each Uniq Share at 96 pence and Uniq’s existing issued share capital at approximately £113 million.

This is a premium of 62.7 per cent to the Opening Price of a Uniq Share on 1 April 2011, the day on which Uniq’s value realisation process was announced.

Expectation of annual net cost synergies of at least £10 million through the elimination of duplicated corporate, divisional and functional overheads, and the overlapping nature of the respective supply chains.

The Greencore Board 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 Greencore Board believes that the Uniq business, now that it has completed its pension deficit-for-equity restructuring, represents an excellent fit as part of Greencore’s strategy in the UK which will:

• help the combined group achieve greater scale in the Food to Go and Chilled Desserts markets; and

• add new and complementary customer relationships to the Greencore Group, in particular with Marks & Spencer PLC.

• Acquisition to be funded through a fully underwritten 5 for 6 rights issue at €0.46 per share to raise approximately €80.2 million, and a new debt facility.

• Greencore has received irrevocable undertakings and non-binding letters of intent to vote in favour of the Resolutions to, inter alia, approve the Acquisition and Rights Issue from certain major Greencore Shareholders in respect of a total of approximately 78.2 million Greencore Shares representing approximately 37.4 per cent. of the issued share capital of Greencore.

• Irrevocable undertaking to accept the Offer received from Angel Street, representing approximately 90.2 per cent. of the issued share capital of Uniq.

Commenting on the Offer, Patrick Coveney, Chief Executive Officer of Greencore, said: “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. It represents an important milestone as we extend the scale and leadership positions of our Group in the UK convenience market. I am very excited about bringing together the Greencore and Uniq teams to deliver on this opportunity.”
Geoff Eaton, Chief Executive Officer of Uniq, said: “Today's announcement is the best possible result for all concerned. 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.”

The news came shortly after Greencore Group plc issued the following Interim Management Statement in accordance with the reporting requirements of the Transparency Regulations, 2007.

In the company’s Interim results announced on 24 May 2011, Greencore highlighted that the Convenience Foods division had recorded a good first half in challenging market conditions with sales from continuing operations increasing by 4.3% on a constant currency basis. This sales momentum has continued into the third quarter with constant currency sales growing by 9% during that period.  This strong performance was driven by:
• Buoyant underlying demand during April and May reflecting in part good weather and the timing of bank/public holidays;
• The year on year impact of new customer gains particularly in our largest businesses of Prepared Meals and Food to Go;
• The Grocery business returning to revenue growth having completed its product rationalisation programme;
• Good sales growth in the US business reflecting strong growth in the recently acquired "On A Roll" business.  On a Roll contributed 3 percentage points of constant currency revenue growth to the Convenience Foods division in the quarter.
 
Input cost inflation is expected to be around 4% in FY2011 with over 95% of ingredients and packaging requirements for the financial year either purchased or contracted.  The financial impact of this inflation will have been mitigated in FY2011 through internal efficiencies, product reconfiguration and selected price increases. 
 
The Ingredients and Property division experienced exceptional revenue growth in the quarter driven both by the impact of commodity price movements and strong underlying demand.
 
As previously reported, the Group successfully completed the refinancing of its primary bank facility of £280m for a 5 year term at competitive rates during May. 
 
The trading environment in the company’s core UK convenience foods market has been both challenging and volatile during 2011 and the Board expects this to remain the case in the seasonally important final quarter of FY2011. Nevertheless, assuming that the average Euro: Sterling exchange rate for the full year remains in the range of 0.85-0.87, the Board anticipates delivering adjusted EPS in line with market expectations.