Sushi boxes, soup cartons and pre-packed sandwiches maker Greencore (GNC) rallies 13% to 329.3p on the proposed £594.3m acquisition of high-growth US peer Peacock Foods.
Investors are hungry for exposure to an exciting deal that not only accelerates Greencore's vision to be a global convenience food leader, but also quadruples its US sales.
Chicago-headquartered frozen breakfast sandwiches-to-kids' chilled meals maker Peacock will be nothing less than transformational for Greencore's US business.
Bringing an additional US$1bn sales (and growing) to the top line, the target also gears Dublin-headquartered Greencore into a trend towards outsourced manufacturing among US consumer packaged goods giants.
Announced alongside strong full year results, the deal will be financed via a £439.4m rights issue and some £200m of new debt facilities. Investors are often right to be wary when the term 'transformational acquisition' is touted, but there is an excellent strategic fit between this pair, both makers of frozen breakfast sandwiches, chilled meals and salads.
Operating from seven US sites, Peacock makes convenience foods for large US consumer packaged goods customers including Tyson Foods, KraftHeinz, Dole and Kellogg's.
Growing more rapidly than Greencore, Peacock will broaden the former's customer base in convenience foods, dramatically expand its US manufacturing footprint and increase group operating profit by more than a third.
Greencore is also targeting annual cost synergies of at least $15m by the end of the financial year to September 2019, though it should be noted the mooted deal still needs the nod from shareholders at next month's EGM (7 Dec) and from the US competition authorities.
