UK-based food group Uniq has indicated that it intends to use the proceeds from its disposal of Marie, its French prepared meals business, to pay down debt, address its pension deficit and reinvest in its remaining businesses.
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Uniq has reached a binding agreement that will see French poultry group LCD acquire Marie for EUR60m (US$84.5m), plus the assumption of EUR13m in debt. Completion is subject to works council consultation and French competition authority approval.
According to a note from Investec analyst Nicola Mallard, the deal offers Uniq “a solid price” as “trading has not been easy in the French market” and in the first quarter Marie announced a 7.6% sales decline.
The first GBP25m in proceeds will be used to pay down Uniq’s debt. The remainder will be used to tackle the company’s pension deficit and reinvest in Uniq’s other businesses, a spokesperson for the company told just-food.
“The pension deficit is a legacy issue from when Uniq was Unigate… It has a pension scheme that services a lot of people no longer in the company,” the spokesperson said.
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By GlobalData“The rest has been set aside to help develop the company’s other businesses,” the spokesperson added.
In March, Uniq said that it was “considering options” for its French and Northern European businesses. The company, which had posted deepening annual losses, appointed advisers to consider the future of its units in France and northern Europe.
According to Mallard, the sale process for the Northern European business is likely to be about three months behind that of its French operations.
However, Uniq would not confirm that it plans to sell its business Northern Europe.
“Uniq has commenced a process to either sell or find a joint venture partner for all continental businesses… [The remaining funds] may be used to fund a joint venture in Northern Europe or to invest in the core UK business,” Uniq’s spokesperson said.
Since speculation that Uniq was preparing to announce a deal hit the market, the company’s share price has risen by approximately 50%. Uniq’s share price closed 10.58% up today (26 June) at 28.5 pence.
