Irish convenience foods group Greencore has announced it will merge with UK-based rival Northern Foods to form a new company called Essenta.
The 50-50 merger will create a company with sales of £1.7 billion (€2 billion) and 17,000 staff, with projected synergies of £40 million a year.
It is expected that the new company will achieve annual savings in overheads of £15 million; about £20 million in purchasing; and £5 million in tax efficiencies, with at least half of the cost benefits expected to be achieved within 12 months.
Essenta’s corporate headquarters will be in Ireland, and Northern Foods’ head office in Leeds will close.
Northern Foods’ products include Goodfella's pizzas, Holland's and McDougalls pies, Fox’s biscuits and Matthew Walker Christmas puddings. It also manufactures ready meals for supermarkets including Marks & Spencer, Morrisons and Tesco.
Greencore supplies a number of major retailers with products including sandwiches, chilled prepared meals, chilled soups and sauces, ambient sauces and pickles, cakes and desserts and Yorkshire puddings.
Commenting on the Merger, Anthony Hobson, chairman of Northern Foods, said:“The proposed merger is a great opportunity to develop fully the potential of both companies. It will create a sustainable, top tier organisation which will be capable of delivering best in class food products and innovative solutions to its customers.
“We have a great executive leadership team whose priority is to ensure that we work closely with our employees, our customers and our shareholders to integrate effectively and capture the huge opportunities available.”
Patrick Coveney, CEO of Greencore, added: “Essenta Foods presents a compelling opportunity for all stakeholders. It creates a substantial chilled prepared food company in fast growing categories in the UK which is enhanced by strong branded positions in biscuits and frozen food. The investment case is underpinned by tangible cost synergies and the platform for further growth in the UK, Ireland and the US.
“The time is right for both companies to build a real ‘better than both’ business and I look forward to bringing together the teams from Greencore and Northern Foods to deliver on this opportunity.”
The deal has been recommended by the boards of both companies, with the seven largest shareholders in Greencore and Northern Foods giving their support to the deal in the 24 hours before the announcement
Greencore currently operates from 19 facilities (17 of which are manufacturing facilities) in the UK, Ireland and the US, directly employing approximately 7,000 people. Northern Foods operates from 24 facilities (18 of which are manufacturing facilities) in the UK and Ireland, directly employing over 9,000 people.
