Greencore to Sell Troubled U.S. Food Unit for $1.1 Billion

(Bloomberg) -- Irish convenience-food supplier Greencore Plc agreed to sell its U.S. unit back to its previous owner for $1.1 billion, exiting the troubled business less than two years after buying it.

Hearthside Food Solutions LLC, a major supplier to companies such as Kraft Heinz Co., is buying the business, formerly known as Peacock Foods, the Dublin-based company said in a statement Monday. Greencore shares rose as much as 8.5 percent in London.

The transaction returns the business, which makes refrigerated sandwiches and salads, to its previous owner, Charlesbank Capital Partners, a private-equity company that bought Hearthside in May along with a Swiss partner. Greencore said it aims to focus on being a supplier of U.K. convenience food.

Earlier this year, Greencore said it would miss earnings expectations as it moved to reshape its U.S. business, sending its shares plunging by 25 percent. Chief Executive Officer Patrick Coveney had planned to spend half his time in the U.S. to tackle the problems.

At that point, Greencore said it would take a charge of 3 million pounds ($3.9 million) to cover costs including those linked to halting fresh production at its Rhode Island facility from March 25. Last year, the company’s shares fell to the lowest level in more than three years after it voluntarily recalled sandwiches and seafood stuffing in that market after a health scare.

Greencore received an unsolicited approach from Hearthside at the end of August, CEO Coveney said.

The proceeds will allow Greencore to declare a special dividend of 72 pence per ordinary share, Greencore said. Hearthside is based in Downers Grove, Illinois.

HSBC and Barclays advised Hearthside.

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