Oasis management, an activist fund, has become Greencore’s largest shareholder. This puts pressure on the UK sandwich manufacturer to accelerate its turnaround plan following years of lax share price performance.
The Hong Kong fund, which previously advocated for change at Premier Foods, The Restaurant Group and other companies, increased its 5.1% stake of Greencore from 5.1 to 10 percent, replacing Polaris Capital Management, the largest shareholder in the company.
Oasis is frustrated by the fact that it has not paid a dividend since 2020 despite having lower debt than other companies such as Premier Foods or Bakkavor Group.
Sandwich maker completed a £50mn share buyback in two years. In its May trading update, the company announced that it would return another £50mn over the next 12 months to shareholders, beginning with a £30mn buyback of shares, and the board is considering declaring dividends.
Greencore shares have increased by 80 percent since Oasis made its holdings in the company public in March.
Oasis has no problem with the turnaround plan of the company, which includes cutting jobs, letting go less profitable contracts and increasing the efficiency in its plants. However, a source familiar with Oasis’ thinking believes that these plans can be implemented faster.
Greencore has declined to comment.
In its last trading update, the company increased its profit forecast for the year to £86-88mn. The Group’s financial performance has been accelerating, which is encouraging. We are focusing on profitability and returns,” stated chief executive Dalton Philips.
Greencore, a white-label manufacturer, has seen its sales volume hold up better than that of more expensive brand foods during the recent cost of living crisis.
Greencore has been struggling to recover from a half-decade of poor results following a botched US expansion and a drop in sales due to the pandemic when people cooked at home instead of buying meal deals.
The company’s operating margins for the six months to March ended up being better than expected. They increased 200 basis points, to 3.3%, as a result. The revenues were in line with expectations, down 6.4% compared to last year to £866mn.
Rubric Capital management, an activist fund, also owns a stake in Greencore of over 5 percent. This was built up by Rubric in 2022. The New York-based Fund has conducted campaigns in the past at UK firm Mereo Biopharma as well as US technology company Xperi.
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