Produce supplier Greenyard has agreed to sell off its horticulture arm for €120m (£107m) to Belgian private equity group Straco.
The sale includes the Greenyard Horticulture and Mycoculture businesses, which saw sales hit €34.4m (£27m) in the first quarter of the 2018/19 financial year, up 35% year on year.
During the same period, its fresh produce business fell 2.4% to €884.7m (£791m), while its frozen operations also dipped 2.1% to €174.7m (£156m). Greenyard said it would now concentrate on strengthening its performance in its core fresh and frozen operations.
The deal to divest its horticulture arm is set to complete before the end of the financial year, enabling Greenyard to pay off a €150m (£134m) retail bond due in 2019.
“Today, our focus is needed on improving profitability again and on deleveraging our balance sheet,” said Greenyard CEO Hein Deprez. “In our two other segments (Fresh and Long Fresh) our strategy to build strong relationships with its customers remains intact.
“We remain keen on cooperating with growers and retailers to develop with them new concepts that create value for all parties in the chain,” he added. “This reorientation towards our Fresh and Long Fresh segments will allow more focused management’s attention and a faster implementation of impactful operational improvement actions for internal profitable growth.”
Greenyard Horticulture specialises in producing mushrooms, with markets in more than 60 countries. Its 14 production and processing facilities within Europe and Russia will also transfer to Straco as part of the agreement.
It comes weeks after the Belgium-based company posted Q1 sales down 1.5% on the same period in 2017 to €1,093.7m (£978m).
The supplier was forced to amend its projections for the 2018/19 financial year after a range of its frozen veg products were contaminated with listeria at a plant in Hungary, triggering a raft of recalls early in July costing an estimated €30m (£27m).
Meanwhile, the summer droughts experienced across Europe left Greenyard anticipating produce shortages of between 30% and 50%.
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