LONDON (Reuters) - Britain's biggest sandwich maker Greencore Group GNC.L said on Monday it would buy U.S. convenience food manufacturer Peacock Foods for $747.5 million in a bid to transform its U.S. business.
The announcement sent Greencore’s shares up 12 percent.
Irish-registered but London-listed Greencore had signaled an intention to expand in the United States where it already produces sandwiches, salads, sushi and deserts for customers including Starbucks and the 7-Eleven convenience store.
It said it expects the deal to more than quadruple its total sales in the United States to contribute around 42 percent of group revenue, up from around 15 percent currently.
Illinois-based Peacock focuses on frozen sandwiches for breakfast consumption, snack kits for children and salad packs, among other items.
Greencore expects to see significantly enhanced earnings and a targeted return ahead of cost of capital from the first full year of ownership.
“This is a huge deal for Greencore, it gives us real scale, real reach and a very strong performance in the United States and it rebalances our portfolio,” Greencore Chief Executive Patrick Coveney said in a statement.
The news sent shares in Greencore up 12 percent in early trading on Monday, giving it a market value of 1.4 billion pounds ($1.8 billion).
Greencore, founded 25 years ago, will buy the business on a debt free and cash free basis, backed by a fully underwritten rights issue offered to qualifying shareholders.
Coveney does not expect the deal to be affected by any changes to global trade that may come from the election of Donald Trump as president, with its food manufactured locally for local brands, he said.
“Whatever may happen and frankly I’m not sure people know yet in terms of the implications for global trade once Donald Trump becomes president, it’ll have very little impact on underlying food demand for U.S. consumers,” he told Irish national broadcaster RTE.
Peacock said the deal would help make it more innovative.
“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 Foods CEO Tom Sampson said in a statement.
Reporting by Kate Holton in London and Padraic Halpin in Dublin, Editing by Paul Sandle and Susan Fenton
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