Greencore Group, headquartered in Ireland, specializes in producing convenience foods, with its operations divided into segments, namely Convenience Foods UK and Ireland. The company’s offerings span chilled, frozen, and ambient foods, catering to both retail and food service sectors across the United Kingdom.
Notably, Greencore holds the distinction of being a primary supplier to all major supermarkets in the UK. Additionally, it serves convenience stores, travel retail outlets, discounters, coffee shops, food service establishments, and various other retailers.
Along with an extensive infrastructure, Greencore boasts over 16 manufacturing facilities and 18 distribution centers strategically located throughout the UK.
Regarding its financial standing, Greencore currently commands a stock market value of 531.2 million pounds, translating to approximately 1.14 pounds per share.
Oasis Management
Oasis Management, a prominent global hedge fund management firm, is headquartered in Hong Kong, with additional offices situated in Tokyo, Austin, and the Cayman Islands.
Established in 2002 by Seth Fischer, who currently serves as its chief investment officer, Oasis has built a reputation as a genuine international activist investor, focusing primarily on Asia with occasional forays into Europe.
The firm boasts a remarkable track record of engaging in successful international activism, employing various strategies such as board representation, opposition to strategic transactions, advocacy for strategic actions, enhancement of corporate governance, and ensuring management accountability.
According to a report by the Financial Times on March 15, Oasis Management has been steadily acquiring a stake in Greencore, nearing the significant 5% threshold in the UK. Managing director Daniel Wosner has reportedly held multiple meetings with Greencore’s board and management in recent times.
Greencore Group stands out as a top provider of prepackaged and convenience foods across the UK and Ireland, catering to a diverse clientele encompassing supermarkets, convenience stores, retail outlets, coffee shops, and various other retailers.
The company’s financial breakdown reveals two primary segments: “food to go” and “other convenience,” with the former contributing 65% of the group’s revenue in 2023, leaving the remainder to “other convenience.”
The onset of the COVID-19 pandemic marked a significant turning point for Greencore, leading to a struggle to regain its market position and restore both its stock value and operational performance.
The company witnessed a sharp decline in its stock price since its pre-pandemic peak.
Moreover, its adjusted operating profit and earnings before interest, taxes, depreciation, and amortization (EBITDA) have yet to rebound to pre-pandemic levels, lagging at 76.3 million pounds and 132.8 million pounds, respectively, compared to 105 million pounds and 142 million pounds.
Operating margins have also seen a notable decrease, dropping from 6% to 7% pre-pandemic to just 2% in 2020 and 2021, with a partial recovery to 4% in 2023.
In contrast to its peers, many of whom faced similar setbacks due to pandemic-related challenges, inflation, and a recessionary macro environment, Greencore has faced particular difficulty in returning to its former performance levels.
Notably, the company has yet to reinstate its dividend, which was suspended in 2020. While several peers resumed dividend payments shortly after the pandemic outbreak, Greencore’s reluctance stands out.
Additionally, its operating and EBITDA margins trail behind those of competitors like Premier Foods and Bakkavor, despite showing stronger performance in 2019.
Oasis Management, recognized for its activism primarily in Asia, has selectively pursued activism in Europe on two prior occasions, yielding remarkable returns.
Notably, Oasis engaged in activism with similar businesses to Greencore, including Premier Foods and The Restaurant Group, achieving substantial success in both instances. Considering the current situation at Greencore, there is a compelling case for Oasis to contribute to shareholder value creation.
While Greencore’s management might not face immediate ousting, there is a clear need for strategic changes, with Oasis’s involvement potentially paving the way for financial improvements, such as dividend resumption or accelerated buybacks.
The experience of Alastair Murray, a Greencore director familiar to Oasis through his previous roles at Premier Foods, further underscores the potential for constructive engagement between Oasis and Greencore.
