Ready meals maker Greencore Group PLC (LON:GNC) is selling off its US business to snacks giant Hearthside Food for US$1bn (£817mln) as it doubles down on its “dynamic” home UK market.
It marks a change in strategy for the company and its chief executive Patrick Coveney, who had previously seemed keen on cracking the US.
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The bulk of the cash - £509mln – will be returned to shareholders in the form of a special dividend. A further £293mln will be used to beef up the balance sheet by paying down debts.
Despite the hefty payout, investors weren’t best pleased with the move away from the US, with shares dropping 7% to 192.9p.
“We believe that the proposed sale of our US operation represents a compelling and immediate realisation of value for Greencore's shareholders,” said CEO Coveney.
“We have always had a firm conviction on the underlying value and growth prospects of our US business and believe that this offer fully reflects that.”
He added: “Looking ahead, we are confident that we can deliver further growth and returns in the dynamic UK market. The proposed transaction would enhance our strategic and financial flexibility, which would allow us to build on our industry-leading position in our core UK market whilst also taking advantage of emerging organic and inorganic growth opportunities.”
Greencore, which supplies supermarkets with pre-made sandwiches, soups, quiches and other foods, expects the deal to go through late next month (November).