Big acquisition by Greencore

By Eric Donald

Greencore has made a bid for Hazelwood Foods Plc, the UK based convenience foods manufacturer, for Stg£260 million. When net debt of Stg£90m is included, the total cost will be around Stg£350.1 million.

This is by far the biggest move ever made by Greencore as Hazelwood Foods has annual sales of Stg£775 million making a profit before interest and tax of Stg£49 million. To put the size of the deal in perspective, Greencore has a turnover of Stg£502 million and operating profits of Stg£49 million.

Hazelwood Foods has had its difficulties, a fact that is readily accepted by the Greencore management.

The most recent set of results for the six months to the end of September 2000, show that profit before tax and exceptionals have fallen to Stg£13.1 million from Stg£21.6 million.

Greencore's chief executive, David Dilger, said that these figures disguise the good businesses within Hazelwood and that there are only a small number of businesses performing poorly and making serious losses.

If the bid is successful, Greencore's plan is to dispose of some businesses from both Hazelwood and Greencore, which is expected to yield around £120 million.

Hazelwood has dominant positions in a number of convenience foods sectors. It is the number one sandwich producer in the UK, Germany and the Netherlands while they are developing markets in France and Belgium. Greencore already supply most of the bread for these sandwiches.

It holds a 26% share of the UK chilled pizza market and this will fit well with Greencore's Paramount pizza business.

Hazelwood's quiche business has a number one position in the market in the Netherlands and a number two position in the UK and Belgium.