Greencore makes contingency plan for no-deal Brexit
The chief executive of Irish-based food group Greencore said the company is now contingency planning for a no-deal Brexit, but insisted the business was less exposed to such a scenario than others.
Patrick Coveney was speaking after the company’s shareholders approved the sale of its US business to Hearthside Foods for $1.075 billion (€935 million), marking a U-turn in strategy and a doubling-down on its UK business.
The company currently controls 60 per cent the UK’s £5.6 billion sandwich market.
Mr Coveney said Greencore was assessing with customers “what happens if Britain doesn’t sign a withdrawal agreement and there are border controls in Calais.”
“To be clear UK grocery, the UK food industry does not want a disorderly Brexit with no withdrawal agreement,” he said. But if we end up in a world where these is a shortage of one particular ingredient, we’ll just make something else,” he said, noting the company’s “manufacture-to-order” business gave it greater flexibility.
“On a relative basis the problems it [Brexit] will cause for us are much smaller than in many other parts of the food industry,” Mr Coveney said.
Greencore convened an extraordinary general meeting in Dublin yesterday to allow shareholders vote on its plan to sell-off its US business, ending a decade-long foray in the US market, one spearheaded by Mr Coveney himself.
The surprise move, announced last month, comes just two years after Greencore’s high-profile acquisition of Illinois-based Peacock Foods, which quadrupled its US footprint.Mr Coveney said there was never a plan to sell the US business and that the company had received an unsolicited bid at a very favourable price.
“I completely reject the characterisation of this as a retreat – what we’ve done here is capture what we would have got by successfully operating and growing our business in the US over the next five years today,” he said.
A resolution on the proposed sale of Greencore USA was passed by an overwhelming 97 per cent of shareholders. The company plans to use £509 million of the proceeds to fund a special dividend for shareholders, worth 72p per share, and £239 million to pay down debt. Several investors said the dividend represented “a gift to the Revenue”, referring to the tax liability it would incur, and that the firm lacked a clear strategy.