The Sandwich Factory operates from a single facility in Atherstone, Warwickshire. The manufacturer produces a range of food-to-go products for distribution in the convenience store and foodservice channels.
In the year to March 31 2016, the sandwich business generated revenues of £54M. Net revenue from manufactured products in the financial year ended March 31 2016 was £42M.
The acquired business will extend Greencore’s presence in the high growth food-to-go category outside of its current core business with large grocery customers.
According to Greencore, the facility also offers an opportunity to “modestly increase” overall capacity across Greencore’s food-to-go network and will bring new capabilities in short-run, specialist product formats.
In February, the Irish own-label food manufacturer was given a glowing report by analysts for its progress. Its food-to-go and chilled convenience businesses were highlighted, together with its successful sandwich relationship with Marks & Spencer.
Funding the purchase
The total consideration of the latest deal would be up to £15M, subject to changes related to levels of working capital and net debt. Greencore said it would be funding the purchase from existing debt facilities.
The transaction, it said, was expected to be neutral to earnings in the 2016 financial year and modestly accretive thereafter.
Greencore ceo Patrick Coveney said: “This acquisition makes strong strategic sense for Greencore, given our ongoing focus on the food-to-go market.
“The Sandwich Factory will extend our reach into customer channels in which we are currently under represented, notably convenience stores and the travel sector, and will also bring new product types into the Greencore portfolio.
“We are delighted to be adding more capacity to our manufacturing network, and to be welcoming new colleagues to our business.”
Core Protein Business
Cranswick said the sale was part of its strategy to focus on its core protein businesses.
The meat firm’s ceo Adam Couch said: “I am pleased to announce the sale of our sandwich business to Greencore which is very much in line with our strategy of focusing on our core protein businesses.
“Moreover, I am particularly delighted that the sandwich division is being acquired by a proven global leader in Greencore who will bring new opportunities and strengths to this business, its customers and the staff to whom, on the board’s behalf, I would like to extend our thanks for their long-standing loyalty and commitment to Cranswick.”
The analysts’ view of Greencore’s Cranswick deal
Shore Capital
Shore Capital welcomed news of the sale of the Sandwich Factory to Greencore. It said the move made sense and described Cranswick as “a class act in the consumer space”.
In a statement on the deal, the analyst said: “The group has confirmed the disposal of the Sandwich Factory to Greencore for a consideration of £15M. We have long considered sandwiches as non-core to Cranswick so the disposal comes as no surprise to us.”
Analysts N+1
Analyst N+1 also welcomed the sale. It said: “Given underlying strengthm we would expect the disposal to be only marginally dilutive.”