Greencore could attract more private equity interest

Experts said a private equity business was the most likely source of an offer for the firm and ruled out a bid from a UK trade buyer due a lack of realistic options in the sector.

Darren Greenfield, an analyst at financial specialist NCB, told FoodManufacture.co.uk: “There really isn’t a huge amount of trade buyers in Greencore’s sector at the moment. There is 2 Sisters, but it said it would not be making any more acquisitions for the time being. Premier Foods is also not in a position to make an offer, as it is selling a lot of its businesses.

“The most likely destination is a private equity business, which will be looking at the dividend yield they can get from a firm like Greencore. There is a lot of upside to the value, so that will appeal to any private equity buyer.”

Financial muscle​

Julian Wild, food group director at law firm Rollits agreed. He told FoodManufacture.co.uk that a private equity business would have the financial muscle required for a possible Green core bid.

He said: “They tend to be pretty opportunistic. It’s all about value and there is still a lot of private equity money around. I think the unrest that surrounded Greencore previously was from private equity and I’m sure that was value driven.

“I’d say private equity is the most likely source, as it is all about value on entry and exit and whether there is money to be made.”

Wild also ruled out a trade buyer, concluding that there were no firms in Greencore’s sector with the resources for such a bid.

Intense speculation​

Greencore was the subject of intense speculation from a mystery bidder at the end of last year, with US private equity firm Clayton, Dubilier & Rice widely touted as the business in question.

These talks came to an end in December however, after Greencore revealed “the Board’s unanimous view on the strong underlying value of Greencore and the current dislocation in global equity and debt capital markets”.

Earlier this month, the firm also announced that it would be switching its currency denomination from euros to sterling as part of its bid for listing on the FTSE 100.

This followed the cancellation of the firm’s shares on the Irish Stock exchange last year.

Nicola Mallard, an analyst at Investec, told FoodManufacture.co.uk that any investors would ultimately be attracted to the “underlying performance” of Greencore’s business.