“We have strong support from shareholders, a high level of irrevocable commitment and backing from Angel Street,” he said. That company owns 90.2% of Uniq. About 37.4% of shareholders have backed the acquisition with irrevocable undertakings and non-binding letters of intent.
Shareholder support arose from the operational synergies and favourable tax status the acquisition would bring, said Coveney. “We bring growth momentum to this combination and Uniq has strong revenue growth in the sector with third quarter group revenues up 11%.”
Allan Williams, Greencore’s cfo, highlighted savings of £10M which he expected to be realised in the company’s next financial year beginning on 1 October 2011. “We expect £5M worth of savings from corporate and central control. A further £5M will be realised from purchasing and supply chain savings,” said Williams.
London Stock Exchange
Although the group’s headquarters and tax residency will remain in Ireland, the company plans to delist from the Irish Stock Exchange in order to register solely with the London Stock Exchange and to denominate its revenues in sterling.
The transfer will make the company eligible for the capitalisation-weighted FTSE All-Share Index, and will help to reduce the group’s vulnerability to fluctuating euro/sterling exchange rates, said Williams.
When the transaction is completed, 90% of the group’s revenue will be denominated in sterling he added.
Coveney described the new tax status that the acquisition would bring as being an “extremely significant” part of the transaction. “After a reorganisation of pension funds, the Uniq group will be able to offset cash tax charges for the foreseeable future. There will also be some cash tax benefits for Greencore,” he said.
Uniq had reorganised its business with regard to pension funds by placing more than £100M of cash and equity into its pension scheme. That left the company with £350M of taxable attributes in its business.
The acquisition of Uniq would also meet Greencore’s objective of further extending strategic growth in the convenience and chilled food sector, said Coveney. “Greencore already has sales of £700M in convenience foods, one of the benefits of this combination is that we will end up with a broader and larger business in the UK.
“Another benefit will be to broaden our customer mix in the UK with much larger business to Marks & Spencer than before,” he added.
Uniq’s Food to Go division is a major supplier to the premium retailer.
Meanwhile, Coveney said he was satisfied with the development plans for Uniq’s other division Minsterley – described by Shore Capital analysts, Darren Shirley and Clive Black as “a well-known problem child".
Coveney said: “It is no secret that Minsterley has struggled over the years but a clear plan is in place. The management team is pruning some activities and focusing the portfolio on high value products.”
Greencore’s recommended £113M cash offer for Uniq values the chilled and convenience food firm at 96p per share.