Greencore: Announces Proposed Acquisition Of Peacock

Dublin / IE. (gg) Greencore Group PLC, a leading international convenience food business, is pleased to announce the proposed acquisition of Peacock Foods for total consideration calculated by reference to an enterprise value of 747.5 million USD (594.3 million GBP at 1.2577 exchange rate) on a debt free and cash free basis.

Transaction Highlights

• Peacock is a fast-growing US convenience food manufacturer with strong positions in frozen breakfast sandwiches, kids’ chilled meal kits and salad kits, generating revenues of approximately 1 billion USD and Adjusted Ebitda of 72.1 million USD in year to September 2016
• Combined business has the potential to transform Greencore’s market and channel position in the US and create a strong platform for long term profitable growth
• Funded by a fully underwritten rights issue offered to Qualifying Shareholders to raise a total of 439.4 million GBP and new debt facilities of approximately 200 million GBP. Pro forma net debt / Ebitda of 2.5x
• Compelling strategic rationale, with expected significantly enhanced earnings and targeted return ahead of cost of capital from first full year of ownership

Commenting on the Acquisition, Greencore’s CEO, Patrick Coveney said: «The acquisition of Peacock will transform our US business, strengthen our position in high growth categories, broaden our channel and customer exposure, and add significant scale to our operations. We believe Peacock’s success is built on the same fundamental strategy and values that drive Greencore, making products that consumers love, building deep, longstanding relationships with customers, investing in high quality manufacturing capacity, food safety capability and, most importantly, people. We are delighted to welcome the Peacock team into the Greencore Group».

Tom Sampson, Peacock Foods CEO, added: «We are thrilled to be joining the Greencore team at this important time in our growth.  We have been particularly struck by the similarities in the way we run our business and our mutual long-term commitment to the US convenience food market. We are excited by the opportunity that we now have to leverage Greencore’s expertise in innovation and fresh food manufacturing, thereby bringing a broader set of capabilities to our customers».

Peacock is a Fast-growing Convenience Food Manufacturer

• Peacock manufactures convenience food products for large US consumer packaged goods (CPG) customers
• Focused on fast-growing categories such as frozen breakfast sandwiches, kids’ snack kits and salad kits, and supported by the industry trend towards outsourced manufacturing
• Deep, long-standing relationships with CPG leaders including Tyson Foods®, KraftHeinz® and Dole®
• Headquartered in Geneva, Illinois, and operating from seven large well-invested facilities with a track record of quality and safety, and expertise in automation, project engineering and packaging
• Attractive contract model including co-investment with customers for capital expenditure on new projects
• Strong historic profit growth with Adjusted Ebitda growth of 36.6 percent between the 12 months ended September 2015 and September 2016

Compelling Strategic Rationale

The Acquisition transforms Greencore’s position in the US and provides a platform for sustained profitable growth.

• Operating scale in the US: represents a step change in scale in overall revenues, presence in attractive growing categories, and national manufacturing footprint
• Strong market positions: increases exposure to leading brands in fast-growing categories such as frozen breakfast sandwiches, kids’ snack kits and salad kits
• New channels and new customers: brings long term relationships with leading customers in complementary channels, such as Tyson Foods®, KraftHeinz® and Dole®; Greencore senior executives have met with Peacock customers, representing approximately 70 percent of Peacock’s revenues, who have expressed their support for the acquisition and the continuation of existing supply agreements
• Enhanced operating capacity with broader geographic reach: adds seven well-invested scale sites to create a network that will have five times the footprint of Greencore’s current US operations and enhanced geographic reach
• Complementary competencies: adds experience in automation, project engineering and packaging formats to Greencore’s existing strong competencies in food safety, innovation, new product development, and short shelf-life food manufacturing; the broader set of capabilities creates significant opportunities to bring new products to existing customers and to further develop new channels and customers
• Strengthened leadership team for a larger US business