Shore Capital Stockbrokers has labelled the recent acquisition of US-based Peacock Foods by convenience-foods giant Greencore as "transformational for the group’s strategic ambitions in North America".
Shore Capital's Darren Shirley said that the deal should "significantly improve the group’s cash-generation credentials, materially accelerating the deleverage potential".
Once the deal is completed, Greencore's US operations will account for around 45% of group turnover, Shirley noted, which will make the business more "balanced".
"In addition, the deal will materially increase the group’s exposure to the broader USA retail market, which will augment its growing presence in the convenience and coffee-shop markets," he said.
"With materially lower private-label penetration than the UK, increasing its retail market presence through direct engagement with the end retailer was also going to prove a challenge, and we believe becoming a high-end manufacturing partner with leading branded players (in fast-growing categories) makes strong strategic sense."
Last month, Greencore reported a 10.6% increase in reported revenue in its preliminary full-year results.
© 2016 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. To subscribe to ESM: The European Supermarket Magazine, click here.
