Greencore to sell malt business

by Eric Schroeder
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LONDON — Greencore Group P.L.C. has agreed to sell its malt business to Axereal Union De Cooperatives Agricoles for up to €116.25 million ($158.75 million). Greencore said the disposal completes its transition into a focused convenience foods player with a growing presence in the United States.

“While Greencore Malt has had a long and proud history, and been a significant contributor to group earnings in recent years, it operates in a cyclical market now characterized by increasing levels of brewer and maltster consolidation,” said Patrick Coveney, chief executive officer for Greencore. “Having tested the market with several potential purchasers, we believe that the transaction announced today represents an excellent deal for Greencore shareholders, but also one that will provide enhanced opportunities for Greencore Malt’s suppliers, customers and employees.

“Looking ahead, this deal will tighten our strategic focus, strengthen our balance sheet and provide capital to fund future growth over time in both our U.K. and U.S. convenience foods markets.”

Greencore said proceeds from the sale will be used to reduce group borrowings, which will enhance the company’s financial capacity to pursue future growth opportunities in line with its strategy in the U.K. and U.S. convenience foods sectors.

The Greencore malt business has seven malting plants that have a combined annual output capacity of approximately 520,000 tonnes. In the year ended Sept. 25, 2009, the business posted operating profit of €20.5 million on sales of €217.2 million.

France-based Axereal is a French cooperative formed in July 2009 through a merger of Agralys and Epis Centre. Axereal is a leading player in the European grain sector, sourcing more than 5 million tonnes of grain and selling more than 8 million tonnes annually.

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