Greencore Group, an Ireland-based manufacturer of convenience foods, has recently come under the activist radar of Oasis Management. With Oasis Management building a stake in Greencore and approaching the UK’s 5% threshold, the company finds itself at a crucial juncture.
The Covid-19 pandemic dealt a heavy blow to Greencore’s stock price and operating performance. The company has struggled to regain its footing, with adjusted operating profit and earnings before interest, taxes, depreciation, and amortization still below pre-pandemic levels. Operating margins have also seen a decline, resting at 4% in 2023 compared to 6% to 7% in the years leading up to the pandemic.
When comparing Greencore to its peers, the company’s challenges become more evident. While many of its competitors were similarly impacted by the pandemic and macroeconomic conditions, Greencore has lagged in its recovery efforts. Operating and EBITDA margins are lower than those of peers like Premier Foods and Bakkavor, despite having better margins in 2019.
Oasis Management, known primarily for its activism in Asia, has successfully undertaken activist campaigns in Europe as well. Campaigns involving companies like Premier Foods and The Restaurant Group have yielded impressive returns, positioning Oasis as a value-creating investor. Premier Foods, in particular, has seen significant growth and performance improvements following Oasis’s involvement.
Potential Impact on Greencore
Given Oasis’s track record and success in creating shareholder value in similar businesses, their involvement in Greencore could lead to positive changes. The possibility of offering managing director Daniel Wosner a seat on the board could be beneficial for Greencore, potentially paving the way for strategic decisions to enhance financial performance.
Recommendations for Greencore
While Oasis may not necessarily push for executive ousters at Greencore, there is a clear need for changes within the company. Streamlining operations, potentially through asset sales, could be a path towards creating shareholder value. Greencore could benefit from the expertise and guidance that Oasis has demonstrated in previous campaigns.
The entry of Oasis Management into Greencore Group could signal a period of transformation and strategic realignment for the company. With a focus on enhancing financial performance and creating shareholder value, the involvement of Oasis has the potential to positively impact Greencore’s future trajectory. It will be interesting to observe how the dynamics between Oasis and Greencore unfold in the coming months.