Greencore Makes Further Platform Acquisition in the US
Greencore has further strengthened its business in the US with the acquisition of HC Schau & Son, a fresh food manufacturer with facilities in Chicago, Illinois and Jacksonville, Florida. The acquisition, which is worth up to $19 million, will form a critical part of the supply network for a significant new multi-regional contract gain in Food to Go with a national food service chain.
Schau is a producer of fresh sandwiches and sushi as well as fresh entrees and other ready to eat items, sold through both the convenience store and grocery retail channels. It has an established modern facility in Chicago and a new high quality start-up facility in Jacksonville. For the year ended December 2011, it had revenues of $32 million (£20.5 million).
The Acquisition provides the capability and capacity to drive growth in the US, both with existing customers and with the recent new business win. It will build on the acquisition of Marketfare Foods in April 2012 by adding scale with 7-Eleven, to whom Schau is a long-term supplier in the Chicago region. In addition, Greencore has put in place a multi-year partnership with the new customer to supply its stores with approximately $50 million of Food to Go products on the east coast and in the mid-west from four of Greencore’s facilities. The delivery of this new business will be phased in between September 2012 and March 2013.
Under the terms of the Acquisition, Greencore will pay an upfront cash consideration of $13.0 million plus deferred cash consideration of $4.3 million. An additional cash amount of up to $2.0 million will be payable dependent on certain performance conditions. The transaction will be funded from existing debt facilities and will have a minimal impact on the Greencore’s leverage. It is expected to be modestly earnings accretive from the first year of ownership. Integration and transaction expenses are estimated at $2.5 million and will be treated as an exceptional item.
Patrick Coveney, chief executive of Greencore, says: “Schau, along with Marketfare, will allow us to take a strong step forward in executing the next stage of our US strategy. Greencore now has a Food to Go platform in the US that will not only enable us to better serve our existing customers, but also to support what is a significant and exciting new business opportunity.”
