Greencore to buy US firm Peacock Foods in £594.3m deal
Irish food-to-go supplier Greencore (GNC) has struck a £594.3 million deal to buy American peer Peacock Foods in a bid to strengthen its US business.
Greencore - one of the world's largest sandwich manufacturers - says the takeover will deliver cost savings of at least 15 million US dollars (£12 million) by 2019.
Peacock is seen as a strong player in the US frozen breakfast sandwich market, as well as in children's chilled meals and salad kits, and has long-standing relationships with industry leaders including Kraft Heinz, Dole and Tyson Foods.
It will add to Greencore's roster of convenience foods including chilled meals, soups and sauces, desserts and Yorkshire puddings.
The takeover is expected to be completed by December 30.
Chief executive Patrick Coveney said: "The acquisition of Peacock will transform our US business, strengthen our position in high growt h categories, broaden our channel and customer exposure, and add significant scale to our operations."
Illinois-based Peacock Foods generated one billion US dollars (£800 million) in revenue in the year to September, and 72.1 million US dollars (£57.7 million) in earnings before interest, tax, depreciation and amortisation, over the same period.
The takeover will be financed through a £439.4 million rights issue and new debt facilities worth £200 million.
Greencore's current US division boss Chris Kirke will continue leading the unit following the acquisition.
Peacock Foods chief executive Thomas Sampson will take a senior advisory role, managing customer transition and integration over the next two years.
Jefferies analyst Martin Deboo called it a "transformational deal for GNC and its US aspirations".
"The deal will quadruple GNC's sales in the US and increase the proportion of sales arising there from 15% currently to 45%" at current US dollar exchange rates, he said.