Greencore holds talks over private equity sale

  • @MrNickClark

Greencore, the UK's leading sandwich-maker, has held talks with private equity companies over a potential sale of the group, just months after it failed in an attempt to buy giant rival Northern Foods.

Sources close to the talks said the Dublin-based company was exploring its options after failing to land the takeover of Northern two months ago, and a sale had been discussed. The company, run by chief executive Patrick Coveney, has also considered approaches for other companies in the sector.

It emerged earlier this month that Greencore had called in investment banking group Barclays Capital to advise on potential deals. Investors will be carefully scrutinising its interim results tomorrow for any updates on its strategy. Greencore declined to comment on the story.

The company has 14 manufacturing sites in the UK and the US and employs more than 7,400. It was set up in 1991 through the flotation of the state-owned Irish Sugar Corporation and grew through a series of acquisitions. It posted full-year revenues for 2010 of €856m.

Yet the group missed out on a deal for Northern Foods, which provides ready meals to companies. The bid battle had been running since the turn of the year but Greencore pulled out in March after it failed to trump the £342m deal tabled by Ranjit Singh Boparan. The deal was completed earlier this month. Greencore had held talks with private equity companies over potentially bolstering its bid to buy Northern and drew up a complex structure to approach it. The companies were granted additional due diligence, but decided against bidding. The target's pension fund liabilities are believed to have weighed heavily. Analysts and investors backed the move not to be drawn into a costly counterbid.

Yet it emerged this month that Greencore had moved on to other potential targets, including beleaguered rival Uniq. The proposed deal was believed to value Uniq at about £100m. The group was put up for sale last month when its pension fund trustees took control of the group and called in advisory group Spayne Lindsay to outline its options.