Ireland’s Greencore on its way to ‘real scale’ US business
This latest debt-financed acquisition comes only two months after it bought US Marketfare Foods for US$36m and two years after it snapped up another American sandwich company On a Roll.
It marks part of a wider US strategy to gain traction in the market with its Food to Go business arm, that includes sandwiches, prepares salads and sushi.
The deal involves a multi-year partnership with Schau to supply $50m worth of Food to Go products along the east coast and mid-west region in 7-Eleven stores.
Patrick Coveney, CEO of Greencore, said “Greencore now has a Food to Go platform in the US that will not only enable us to better serve our existing customers, but also to support what is a significant and exciting new business opportunity.”
“Schau, along with Marketfare, will allow us to take a strong step forward in executing the next stage of our US strategy,” Coveney said.
Greencore’s aim in the US is to create a business of “real scale,” he added.
Tactical, complementary buys
Greencore detailed that the buyout of Schau builds upon its Marketfare purchase and is “a further platform acquisition”.
The Irish firm has been trying to secure strong distribution for its Food to Go range in the US and both MarketFare and Schau both supply to 7-Eleven, which provides Greencore with geographical expansion, according to the CEO.
Michael Evans, group communications manager at Greencore, told BakeryandSnacks.com that the acquisition is "an exciting development".
"We've made two acquisitions in the US in the last two months. Our focus now is to secure full integration in these businesses and cement relationships with 7-Eleven," Evans said.
"The potential in the US is massive for convenience foods but we have to be disciplined in our approach, hence the region-by-region, step-by-step approach," he said.
Greencore is applying its knowledge and skills from the UK to its US operations, he added.
The new business with Schau will be phased in between September 2012 and March 2013.
It is costing Greencore, $13m upfront along with a deferred cash consideration of $4.3m. Another $2m may then be spent dependent on performance conditions.
Schau reported revenues of $32m for 2011 and has facilities in Chicago and Jacksonville.
