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| The HMBF facility in Newburyport, Massachusetts. |
Greencore, the Irish food and property group, today announced the acquisition of Home Made Brand Foods Inc. (HMBF), a manufacturer in the chilled food market in the North East region of the United States. This acquisition marks the entry by Greencore into the growing chilled convenience food market in North America.
It was reported this week, that Bakkavor, an Icelandic food company, had amassed a 10.9% stake in Greencore.
Based in Newburyport, Massachusetts, HMBF is a regional leader in fresh prepared food. It manufactures and supplies a range of fresh food products, including fresh prepared meals and salads, sandwiches and quiche to a customer base that includes leading regional retailers such as Stop & Shop, Hannaford and Publix. In the current year, HMBF expects to generate in excess of $40 million in revenues and has potential manufacturing capacity to increase this to $100 million within its existing facility. HMBF’s experienced management team, led by Rick Walters, will remain in place post the acquisition.
The initial consideration payable by the Group is $44 million. Further consideration will be payable up to a maximum of $10 million, dependent on HMBF’s performance in the financial year to 31 December 2008. The acquisition is expected to be modestly EPS accretive from FY09.
Over the past two years, Greencore has undertaken a detailed business development effort in the US chilled food market. The Group has deepened its knowledge of the market and established strong relationships with key regional and national retailers in the US, as well as with potential brand licensors. These relationships, taken together with Greencore’s distinctive operational capability in chilled prepared food, will enable the Group to accelerate the existing growth plans of HMBF to deliver a scale US business.
Greencore will relocate key personnel to the US to develop the Group’s US business. Fergal Leamy, currently development director of the Convenience Foods division, has been appointed CEO of Greencore USA and he will be joined in the US by other leaders in the areas of chilled food manufacturing, supply chain and product development.
Commenting on the US opportunity, Patrick Coveney, Greencore’s chief executive said: “This is an excellent strategic deal for Greencore. What we are about here is marrying our proven operational capabilities in convenience food, developed over 20 years in the UK market, with the emerging US consumer and retailer demand for high quality, chilled prepared food. We have spent the last two years on the ground and are excited by both the significant recent increase in the level of retailer investment in chilled food categories and by the positive consumer response to these initiatives. HMBF represents a strong platform acquisition for us - a profitable, well-run, regional leader with significant headroom for further growth. Rick Walters and his team are widely respected across the industry and we are delighted that they are coming on board to help deliver our US strategy."
