Greencore yesterday completed the latest chapter in its shift to high-growth consumer food brands, announcing the sale of its Erin and William Rodgers businesses to the Campbell Soup Company for €27.16 million.
The sale brings to nearly €220 million the value of assets sold by Greencore in the 20 months since it acquired British foods group Hazelwood for €582 million.
Four weeks ago, Greencore sold its Grassland Fertilisers business for €28 million to Freshgrass Investments.
"This enables Greencore to continue to sharpen the focus of our food businesses on faster-growing chilled and convenience categories while at the same time Erin Foods will significantly benefit from becoming a part of the world's leading soup company," said Mr David Dilger, Greencore managing director.
Chief operating officer Mr Tony Hynes said, "broadly speaking", the company's plan to sell non-core assets was now complete. He said the sale of Erin was "not necessarily" part of the original plan to exit non-core businesses but Campbell had expressed an interest in the business. Knorr is so dominant in the Republic it was decided Erin had no prospect of challenging for the number-one position and so it was decided to sell, he said.
Greencore signalled its intention to shift its focus to market-leading, fast-growing chilled and convenience categories at the same time it acquired Hazelwood. Erin is the Republic's second-largest dry-soup maker behind Knorr, while Rodgers is a private-label supplier employing 80 workers at its factory in Kirby-in-Ashfield in Britain.
The proceeds from the sale will be used to reduce Greencore's debt, which is expected to be just below €600 million by the end of the year.
Mr Liam Igoe, a food analyst with Goodbody Stockbrokers, said the sale was expected and that the price was fair. He added that earnings would be diluted by around 2 per cent as a result of the transaction.
He said in light of Greencore's change in strategy, Erin and Rodgers were on the margins at the group and the company may still have further non-core assets it wished to sell, particularly some businesses acquired as part of the Hazelwood transaction in November 2000.
Mr Pierre Laubies, president of Campbell Europe, said the acquisition formed part of one of its strategic initiatives to expand its European soup and sauces business.
"Ireland is an important part of that strategy," Mr Laubies commented.
Campbell also said it would sell its Drogheda factory, where it currently manufactures McDonnells dry soups and sauces brands.
The property is to be sold to Radical Properties.
Campbell staff at the Drogheda plant have been briefed on the sale and they will now be consulted on options for future production of McDonnells products, according to the company.
