UK: Ready-meals growth prompts Greencore move for Hain site
Greencore wanted to up capacity to meet demand for ready meals
Hain Celestial, the US food manufacturer said last night that Greencore was the buyer of the UK own-label chilled ready meals unit it had announced in May it would sell.
Greencore has snapped up International Cuisine Limited, or ICL, a ready meals business based in north-east England for an undisclosed sum. The site generates annual turnover of around GBP45m (US$71.5m).
However, a Greencore spokesperson told just-food the acquisition was made to boost capacity to meet demand for ready meals.
Citing Kantar Worldpanel data Greencore published in its first-half results statement in March, the spokesperson said the UK ready-meals sector was growing at 9.2%.
"A lot of it has been driven by meal deals. We've seen growth at the low end of the market and at the premium end. It's driven by more consumers using the eating at home occasion rather than dining out," the spokesperson said.
Around 530 staff work at the ICL plant in Durham. The spokesperson said Greencore would look to extract synergies at the site but said it was "too early" to say "where they are going to come from". However, he added there were "no plans" to change the number of staff at the plant.
Analysts at Shore Capital said the acquisition was "a sensible deal at attractive multiples".
"We believe the transaction makes sense as it provides additional ready meals capacity for Greencore without expanding capacity within the industry. At recent historic growth rates, we believe Greencore would have needed to expand its ready meals capacity with 12-18 months, either through expansion of an existing facility or a green field site, either avenue potentially requiring significant capital investment, maybe GBP10-15m," they wrote in a note to investors.
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