Greencore agrees sale of US sandwich arm for £817m

Britain’s biggest sandwich-maker Greencore on Monday agreed to sell its troubled US business for £817 million just two years after buying it.

The FTSE 250 manufacturer has agreed the sale of the US arm — comprising 3000 employees across 13 sites where sandwiches and salads are produced — to Illinois-based Hearthside Food Solutions.

Greencore’s planned disposal comes less than two years after it bought US firm Peacock Foods for $747.5 million (£570 million) in a move expected to quadruple its sales across the Atlantic.

But this year Greencore warned of problems in the division when it found it was hard to expand and it planned to end production at a loss-making Rhode Island factory.

Greencore chief executive Patrick Coveney said: “We got off to a poor start [in the US] this financial year… we weren’t where we expected to be.”

However, he added that he had spent every second week in Chicago since March and business had improved.

Greencore will use the proceeds from the sale to pay down its debt pile to around £200 million from £500 million, and invest further in the UK.

Investors will also benefit as £509 million will be used to pay a one-off special dividend of 72p per share.

Jefferies analyst Martin Deboo said: “Getting out of the US just two years after scaling up there might result in some red faces at Greencore. Relative to which the transaction looks to have significant upside to us.”