Greenyard has agreed to sell its prepared foods division in the Netherlands, a plan announced in 2019 when the company launched a transformation programme in a bid to improve sales and profitability.

Cornerstone Investment Management, a private-equity firm in Poland, and London-based Kartesia, a privately-owned European investor, will purchase the business for EUR17m (US$20.5m), with the deal expected to close this summer, according to a statement this morning (14 June).

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Located in the town of Velden in the south-east of the Netherlands, the prepared foods unit produces canned vegetables such as mushrooms and pasta dishes for domestic and international customers.

Before Greenyard unveiled the transformation project in 2019, Belgium-listed Greenyard had said it was facing pressure on sales and margins in retail. The company hired Marc Zwaaneveld, now joint CEO, to head up a “transformation team” to work on price, quality and service levels.

Hein Deprez, the other co-CEO at Greenyard, said today: “With the divestment of Greenyard Prepared Netherlands, we have fully completed our transformation and we are now able to further accelerate on core activities around the globe, while continuously deepening our strategic relationships. Cornerstone Investment Management has the clear intention to further develop the activities of Greenyard Prepared Netherlands and has ambitious growth plans, which will be instrumental for its success.”

In 2019, Greenyard said it was expecting to generate EUR50-75m from disposals of “non-core assets” across all its divisions. It said it had “already initiated the first divestment projects”.

Back in March this year, the company announced a “capital commitment” from two investors and the refinancing of its outstanding debt. The capital injection, in return for an undisclosed stake, amounted to EUR50m from existing shareholder Joris Ide and a new investor, Belgium-based fund Alychlo.

Andrzej Klesyk, a managing partner at Cornerstone Investment, added today: “Greenyard Prepared Netherlands is a well-known player in the mushroom business and has state-of-the-art capabilities. We are looking to further invest in the company and continue to make it stronger in a highly demanding market. This acquisition is just the first step in our long-term strategy.”

Greenyard is due to publish its annual results tomorrow. In April, the company raised its guidance for adjusted EBITDA to EUR116-117m, from EUR106-110m previously. For the previous year, the profit metric stood at EUR95.7m.

It also said debt leverage, measured against EBITDA, should drop to below three times, adding: “The last quarter showed a strong growth and a continued acceleration of the underlying business, through volume growth that is the result of long-term customer relations. Additionally, a better alignment of sourcing flows and further cost control also contributed to this improvement.”

Announcing its annual results in June last year, Greenyard said “several parallel divestment transactions have been initiated to focus on core operations and activities and improve the financial situation”, amounting to EUR20.7m. “The current Covid-19 pandemic-inducing turbulence on the financial markets has accelerated Greenyard’s decision to re-evaluate its planned divestments,” it said.

Sales for the 12 months rose 3.8% to EUR4.06bn but EBIT turned in a loss of EUR2.6m, compared to a EUR133.4m loss a year earlier. Net profit was also in the red to the tune of EUR68m versus a corresponding loss of EUR192m. Leverage stood at 4.4 times, down from 7.1.