€120m Greencore Malt deal stalls

THE sale of Greencore Malt to the Soufflet group of France has stalled and the €120 million deal isunderstood to have collapsed.

Greencore, the convenience food group with major operations in Britain and Europe and an expanding business in the US was hoping to sell the malting business this year to give it a clear focus on its core convenience food business.

In recent months Groupe Soufflet of France emerged as the main contender to buy the business.

It is a major player in the European malting business and access to Greencore Malt’s seven operations across Europe would have extended its reach in areas it lacked a presence, particularly in the British market, where the Irish group is strong.

The Irish Examiner understands that a number of factors have prevented the French group from going ahead with the deal.

One of the major factors which Greencore previously alluded to was the state of the malting market, hard hit by the global downturn and the resulting fall off in alcohol consumption.

It is understood that Heineken has started to import its own malting barley from elsewhere lessening its reliance on Greencore.

As a result of the sharp downturn in demand it has been speculated that the group’s Athy plant could be operating at 60% capacity in the current year.

Last night Greencore said it was “not going to comment on market speculation” regarding the sale of the malting business and refused also to say anything about the fall off in the demand for malting barley.

A spokeswoman for the group said that the AGM of the group due to be held on Thursday when a full “update” of the trading situation will be provided to shareholders.

If sold on, the deal could have major implications for Irish farmers who produce 150,000 tonnes of malting barley annually if the French group decided to source its barley in Europe instead.

The malting business across Europe is in a state of turmoil due to the slump in beer sales caused by the global economic crisis.

Consolidation moves are taking place in the industry, providing Greencore with an opportunity to exit the business at a good price.

This time last year the group made it clear is sees its long-term future in convenience foods which is headquartered in Britain, with interests in the US market.

Shares in the group were down almost 3% yesterday to €1.31, a fall of 4 cents on the day.