Private equity firms such as Doughty Hanson & Co and trade names such as fellow Irish firm Kerry Foods and Associated British Foods which had emerged earlier in the year when speculation about a possible Greencore takeover was rife were once again being thrown into the mix of potential bidders. A management buyout has also been suggested.
Several city analysts have poured doubt on the desire of UK branded players for a primarily own-label chilled business. This would make a private equity approach more likely. However, there may be other reasons why Greencore might appear attractive at this time.
Greencore has just finished the £113M acquisition of chilled food business Uniq to create a firm with a turnover of almost £1bn. This followed Greencore chief executive Patrick Coveney's failed merger with Northern Foods earlier this year, which was snapped up by 2 Sisters' boss Ranjit Boparan for £342M.
While analysts had suggested that a significant acquisition was essential to protect Greencore from a predatory takeover, Coveney refuted that the Uniq acquisition was a "consolation prize" for not sealing the deal with Northern to form Essenta Foods (see p18).
"I would go so far as to say if you look at the Essenta proposition versus the Uniq proposition on a risk-return basis, yes the potential returns are a little less [with the latter], but because the risks are so much less, you can actually argue for shareholders that it is actually a better proposition," said Coveney.
Could it be that potential bidders see an opportunity to capitalise on a combined business with the potential for good returns via the cost-saving "synergies" on offer and the fact that it is not burdened with big debts or pension liabilities, given the pension swap deal that former Uniq boss Geoff Eaton secured before Greencore acquired it?
Then there is Greencore's nascent US business. While Coveney played down predictions by Fergal Leamy (who launched Greencore USA in 2008) that it could have sales of $500M by 2015 if growth continued at its early stellar rate, he was equally upbeat about its prospects. Unlike the problems high-profile British food firms experienced in the US, he pointed to greater success of Irish firms, such as Kerry, Glanbia and IAWS (now Aryzta).
"We have been in the market for more than three years and have more than doubled our revenues," he said. "We have learned an enormous amount about the needs of US consumers and, more particularly, US customers and US regulators around chilled food."
He added: "Starting from just under $100M today and saying you are going to be $500M sounds a lot, but actually saying in five years time a quarter of our revenues from the group is going to be in the States doesn't sound so big."