Green­core makes con­tin­gency plan for no-deal Brexit

The Irish Times - Business - - BUSINESS NEWS - EOIN BURKE-KENNEDY

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.

Sur­prise move

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.

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