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November 25, 2009

INSIGHT: Greencore hints at US acquisitions

Greencore chief executive Patrick Coveney today (25 November) hinted that the private-label group could soon be closing in on acquisition targets in the US.

Greencore chief executive Patrick Coveney today (25 November) hinted that the private-label group could soon be closing in on acquisition targets in the US.

The head of the Ireland-based convenience food maker told analysts that the company had been monitoring targets in the US in recent months but had been unable to strike any deals.

Greencore, which first entered the US market in April 2008, has publicly stated that it wanted to double its business across the Atlantic per year.

Coveney acknowledged that acquisitions, as well as greenfield development, would be vital to hitting that target on a weighted annual basis.

“We focus on three categories in the US – food-to-go, entrees and sides and salads. They will remain the core areas of focus for us into the medium term,” Coveney (pictured) said.

“We’ve been a little frustrated by our inability – for very good reasons by the way – on the number of M&A opportunities that we had a good look at in the last 12 months. But we do realise that, if we were are going to maintain the kind of trajectory that we are looking at, that we are going to have move from assessing options to executing one of those in the next three to four months.”

Greencore’s fourth-quarter sales in the US jumped by 46% and the company said the contribution its business across the Atlantic makes to group operating profit almost doubled during the fiscal year.

Coveney said Greencore had managed to double the size of its US business after a year in the market but insisted the company wanted to repeat that growth on a “weighted” basis – rather than doubling every year.

“A reasonable judge would say: ‘Look what matters here is do we do something that is consistent with that trajectory on a weighted basis over a period four or five years – or do we do that on each specific point? I don’t want to be a prisoner of that and making acquisitions that don’t make sense to us in order to achieve that,” Coveney explained.

“We’re looking very hard at whether or not there are acquisitions that are comparable to the businesses that we have already bought but we are not restricted to only looking at that. I’d be amazed if we’re not talking quite positively about the choices that we have made – and are already executing – by the time we get to our interims. We’re absolutely on it and we are working through several options.”

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