The Greencore logo is seen outside its factory building in Bristol, England.
Matt Cardy | getty images
Company: Greencore Group (GNC-GB)
Business: Greencore Group is an Ireland-based manufacturer of convenience foods. Its segments include Convenience Foods UK and Ireland. Greencore supplies a range of chilled, frozen and ambient foods to retail and food service customers in the United Kingdom. The company supplies to all supermarkets in the United Kingdom. It also supplies convenience and travel retail stores, discounters, coffee shops, food service and other retailers. It has over 16 manufacturing and 18 distribution centers in the United Kingdom.
stock market price: £531.2 million (about £1.14 per share)
Worker: Oasis Management
Percentage Ownership: N/A
average cost: N/A
Worker Comment: Oasis Management is a global hedge fund management firm headquartered in Hong Kong with additional offices in Tokyo, Austin and the Cayman Islands. Oasis was founded in 2002 by Seth Fisher, who leads the company as Chief Investment Officer. Oasis is a bona fide international activist investor, carrying out activism primarily in Asia (and occasionally Europe). The firm has an impressive track record of prolific and successful international activations. Oasis has as many arrows in its quiver as any activist and has been successful in gaining seats on boards, opposing strategic transactions, advocating for strategic actions, improving corporate governance, and holding management accountable.
What is happening?
on 15th march Financial Times has reported Oasis management is building a stake in Greencore close to the UK 5% limit, and managing director Daniel Woessner has met with the board and management several times.
behind the scenes
Greencore Group is a leading supplier of prepackaged and convenience foods in the UK and Ireland, serving customers including supermarkets, convenience stores, retail outlets, coffee shops and other retailers. The company segments information into two categories: “food to go” and “other convenience.” In 2023, “food and beverage” accounted for 65% of the group’s revenue and “other convenience” generated the remaining 35%. A major inflection point in recent history for Greencore was the COVID-19 pandemic. Since then, the company has struggled to regain its footing and recover both its stock price and operating performance. The stock has fallen sharply since its pre-pandemic peak. Additionally, the company’s adjusted operating profit of £76.3 million and adjusted earnings before interest, taxes, depreciation and amortization of £132.8 million have not reached their pre-pandemic levels of £105 million and £142 million, respectively. Additionally, operating margin fell to 2% in 2020 and 2021, down from 6% to 7% in the years before the pandemic. They have failed to fully recover, resting at 4% in 2023.
Compared to its peers, many of whom were pushed back by the pandemic, inflation and the broader recessionary environment in the UK and Ireland, greencores have particularly struggled to return to their prior performance. First, Greencore has not reinstated its dividend since it was suspended in 2020. Greencore’s partners currently offer dividend yields between 1% and 7%, with an average yield of around 3.5%. Some of them had also suspended payments after the Covid-19 outbreak, but resumed them soon after. Additionally, Greencore’s operating and EBITDA margins are lower than its peers Premier Foods and Bakkavor, but it had better margins in both categories in 2019.
Oasis is known as an Asian activist, which is true – 90% of its activist campaigns have been in Asia. But the firm has taken selective action in Europe twice before. Its returns both times have been incredible – an average of 108.75% versus 5.29% for the MSCI EAFE index. Furthermore, both of those investments were in similar businesses to Greencore: one was a direct peer, Premier Foods, and the other was a restaurant group. At the Restaurant Group, Oasis successfully agitated for the removal of the company’s president as well as asset sales to accelerate medium-term strategic plans to increase adjusted EBITDA, and the company ultimately taken personally by apollo, The Premier Foods campaign was a three-act play. In 2017, after the firm accumulated an 8.3% stake, Premier invited Oasis managing director Daniel Woessner to join. Board of directorsBut he submitted his resignation after just one year. In its second act, Oasis immediately began agitating for change by urging shareholders to vote against re-election Then-CEO Gavin Darby cited shareholder value destruction, poor financial performance, consistently missed targets, lack of strategy and weak corporate governance. While Darby was re-elected in 2018, he announced his resignation shortly thereafter. In the firm’s third act, Woessner was invited back Join the Board in February 2019And the company announced it would launch a strategic review.
Since Woessner’s reappointment, Premier and Greencore appear to be a rising star and a falling comet, respectively. Premier Foods has generated a total return of nearly 300%, while Greencore is down 41.5% in that time. Premier has restarted its dividend, while Greencore has suspended it. Premier’s EBITDA margin is around 20% compared to mid to high-single digits for Greencore.
It is hard to believe that any other investor is more qualified to create shareholder value in Greencore than Oasis. The situation at Greencore appears to be amicable, and the company would likely be well served to offer Woessner the opportunity to join the board. Oasis can help get the company to a financial position where it can resume dividend payments or accelerate buybacks. Additionally, at Restaurant Group and Premier, Oasis emphasized the sale of non-core assets, consistent with streamlining operations and creating shareholder value. It doesn’t necessarily seem that Oasis plans to push for the ouster of the executives here, especially since Greencore’s CEO Dalton Phillips Recently appointed in 2022 and CFO Katherine Gubbins was appointed to her role in 2023, But definitely, change is needed and the management should be aware of it. a greencore director Someone Oasis knows well is former CFO and one-time interim CEO of Premier Foods, Alistair Murray. In fact, Oasis played a role in raising Murray Replace former Premier CEO Gavin Darby In 2019.
Ken Squires is the founder and president of 13D Monitor, an institutional research service on shareholder activism, and the founder and portfolio manager of the 13D Activist Fund, a mutual fund that invests in a portfolio of activist 13D investments.
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