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Cranswick sells sandwich arm to Greencore for £15mln

Sausage maker sells non-core business to Irish food group
Cranswick sells sandwich arm to Greencore for £15mln
Cranswick said it was focusing on its core protein business

--- Updates with more background, broker comment and share price --- 

The City has welcomed a move by sausage maker Cranswick plc to offload its sandwich business for £15mln, saying it made sense.

Brokers said the sandwich business was non-core, had struggled in the last few years and did not fit well with Cranswick's meat businesses.

Cranswick said it was selling Sandwich Factory Holdings to Greencore Group plc (LON:GNC), which beefed up its sandwich business in 2011 by buying Marks & Spencer PLC (LON:MKS) supplier Uniq.

The sausage maker's chief executive Adam Couch said: "I am pleased to announce the sale of our sandwich business to Greencore which is very much in line with our strategy of focusing on our core protein businesses. 

"Moreover I am particularly delighted that the sandwich division is being acquired by a proven global leader in Greencore."

Broker Liberum said: "This is a positive strategic move in our view.

"The sandwich business has struggled in recent years and it was a questionable fit with Cranswick's pork and poultry protein business.

"We estimate the business generated only a modest profit to group earnings.  The sale will likely bring Cranswick back into a net cash position during the course of FY17."

Shore Capital said: "We have long considered sandwiches as non-core to Cranswick so the disposal comes as no surprise to us."

Chris Wickham at broker Whitman Howard said: "Sandwich Factory will be a useful addition to Greencore. In particular, it does not sell into the major food multiples.

"Rather, it will give Greencore enhanced reach into other distribution channels, including garage forecourts and smaller retailers."

Meanwhile, Cranswick said it had made a good start to this financial year, with revenue in the three months to June 30 11% above the same period a year ago.

Shares in Cranswick sizzled up 28p, or 1.2%, to 2362p in early London trading.

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Cranswick plc Timeline

May 24 2016

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