Greencore Spends Up to $54 Million to Enter the U.S.

Greencore Group Plc (GNC), the world's biggest maker of packaged sandwiches, bought Home Made Brand Foods Inc. for as much as $54 million to enter the U.S. market for chilled convenience foods.

The takeover will cost $44 million initially and as much as $10 million more depending on Home Made's performance this year, the Dublin-based company said today in a statement. The purchase will add to per-share profit ``modestly'' starting in the fiscal year through September 2009, according to Greencore.

The Irish food producer has said as long ago as January of last year it was seeking to expand into the U.S. chilled-foods market. Royal Ahold NV (AH)'s Stop & Shop chain and Delhaize Group (DELB)'s Hannaford unit are among the customers for whom Newburyport, Massachusetts-based Home Made turns out prepared meals, salads, sandwiches and quiches.

``This is a significant strategic acquisition for Greencore,'' Liam Igoe, an analyst at Goodbody Stockbrokers in Dublin who advises buying the stock, said in a research report. ``Combined with its U.K.-based knowledge of chilled foods, Greencore should be able to add value to this business over the next 12 to 18 months.''

Spare Capacity

Home Made expects to generate more than $40 million in sales in the current year and has enough spare capacity in its factory to raise this to $100 million, the statement shows.

Greencore fell 7 cents, or 1.9 percent, to 3.72 euros at 10:08 a.m. in Dublin trading. The stock has dropped 16 percent this year, reducing the company's market value to 750.8 million euros ($1.2 billion).

Rick Walters and other Home Made managers will remain in their current jobs, the Irish company said. Greencore appointed Fergal Leamy, development director of its convenience-foods unit, as head of its U.S. division and said he and other ``key'' workers will move to the country.

The U.S. will become ``very important'' in the next 10 years, Chief Executive Officer Patrick Coveney told RTE radio. ``We'd like to, in that kind of time frame, build a business in North America comparable to the very successful business that we have in the U.K.''

To contact the reporter on this story: Louisa Nesbitt in Dublin at lnesbitt@bloomberg.net.

To contact the editor responsible for this story: Keith Campbell at k.campbell@bloomberg.net.

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