Northern Foods agrees merger with Greencore
The company behind Fox's biscuits and Goodfella's pizza has announced plans to merge with the biggest sandwich maker in the UK.
Leeds-based Northern Foods, which also includes Matthew Walker Christmas puddings in its product portfolio, hopes to complete the tie-up with Irish chilled foods firm Greencore by the end of June.
The move will create a new firm called Essenta, based in Dublin with its UK operational centre in Yorkshire, with combined annual sales of £1.7bn.
By bringing the two businesses together, the new company is expected to save £40m a year, through better buying power, smaller tax bills and cost cutting.
Northern has 14 sites in the UK and employs 9,000 people, while Greencore has around 7,000 staff and 17 manufacturing facilities in the UK, including a large sandwich-making site at Manton Wood, in Worksop, Nottingham.
Shares in Greencore and Northern rose 29% and 24% respectively following the announcement of the merger.
Greencore also posted a strong set of full-year results yesterday after restructuring the business over the past year to make it more focused on convenience foods.
Sales increased by 7% to €856m (£726.8m) in the year ending September 24.
It turned a pre-tax loss of €23.4m (£19.9m) last year into a profit of €30.3m (£25.7m).
Northern recently reported a sales drop of 3% to £453m in the 26 weeks to October 2, while pre-tax profits fell 8% to £9.6m.
Like-for-like sales were up by 2.7% following a strong performance in chilled ready meals, sandwiches and salads.
But sales of Northern's frozen products declined by 24% to £94.7m in the period and the division made a £4.6m operating loss, compared with a £5.1m profit the previous year.
If approved by shareholders, the new company would have all the main super- markets in the UK as its customers.
Essenta would have a strong position in the growing sandwiches and chilled ready meals markets, which have grown by 9.8% and 7.7% respectively in the past year.
The company said any redundancies were likely to be modest as it hopes to safeguard jobs through the company's growth prospects.
The merger will see Greencore chief executive Patrick Coveney become chief executive of Essenta while Northern's chairman Anthony Hobson will take the role of chairman.