Bakkavör has agreed to sell its French and Spanish produce businesses to the French co-operative Agrial for €33m.
The deal comprises five businesses; Cinquième Saison Saint-Pol SAS, Cinquième Saison Mâcon SAS, Bakkavör France SAS, Crudi SAS and Sogesol SA.
“The sale of our French and Spanish businesses marks an important step in our strategy of reshaping our portfolio to focus on our core fresh prepared markets,” said Bakkavör CEO Ágúst Gudmundsson (pictured).
In an interview with The Grocer last month, Gudmundsson conceded that customers increasingly preferred to source produce directly from farmers.
Last year, like-for-like UK produce sales fell by 19% to £85m as sales in the UK prepared business grew 4% to £1.32bn.
Selling the French and Spanish produce business will also go towards bringing down Bakkavör’s debt pile. Net debt/EBITDA currently stands at 5.4x, just shy of its banking covenants of <5.75x.
“The transaction will be beneficial from a leverage perspective and net proceeds will be used to reduce our term loan,” said Gudmundsson.
Consultations with the Works Councils at all of the relevant sites have finished and all employees of the French and Spanish businesses will transfer over to Agrial.
The deal is subject to competition authority clearance and is expected to be closed by the end of the first quarter of 2013.