BRITISH FOOD group Uniq has announced plans to close part of its dessert business and shed 350 staff ahead of its proposed sale to Greencore.
The company, which supplies desserts and sandwiches to supermarkets and coffee chains across the UK, is to exit “everyday desserts” to concentrate on “premium” products such as the desserts it makes for Muller and Cadbury. The business, which is to be phased out, is worth about £36 million in sales. Overall, Uniq’s desserts division accounted for £155 million in sales last year, half of the company’s overall revenues.
The cost of the restructuring is expected to be £10 million, Uniq said. Last month, Greencore announced it was to buy its British rival for £113 million (€ 128.5 million). It has received more than 90 per cent support from Uniq shareholders for its bid.
Uniq had been on the market since April after the company’s pension fund trustees took control of 90 per cent of the company by way of an unusual equity-for-debt swap, in a bid to deal with the company’s £400 million-plus pension deficit. The Office of Fair Trading in the UK is expected to issue a decision on the acquisition on September 23rd.
While the Uniq deal was seen by analysts as very positive for Greencore’s chilled food and sandwich business, there has been concern about Uniq’s dessert business. Its decision to restructure and contract its dessert business is the culmination of a review of the loss-making business.
Since the announcement of the proposed acquisition, Greencore has consistently said it is supportive of the Uniq management’s strategic review of the desserts business, particularly its focus on fewer customers and products.
Uniq is due to report its first-half results on September 16th. Revenues grew by almost 7 per cent in 2010, allowing the company to post an operating profit of £4.1 million compared to an operating loss of £1.9 million the previous year.
Greencore’s sales grew by 8 per cent to €440 million in the six months to March 25th this year, though the company recorded a loss of € 251,000 compared with a profit of € 25.1 million in the same period of 2010.
