Carroll ups his Greencore stake to 29.9%
Previously, the Dundalk property developer, who become a multi-millionaire through his property group, Zoe Developments, held the 21.7% equity stake in Greencore which he bought from Dermot Desmond.
It was never clear why Desmond brought into the group out of which he made substantial profits when he sold to Carroll.
It was speculated that his plan to forge a merger of IAWS Plc with Greencore, but that never happened.
Greencore and IAWS did some business together and still share a 50/50 stake in Odlums, the flour millers.
The IAWS stake migrated to Origin Enterprises when IAWS decided to float off the core businesses that initially formed the basis of the group when it came to the market in the late 1980s.
IAWS and Greencore had a healthy respect for one another but the market was sceptical, and while some analysts acknowledged the possibility of a merger, they never really saw it happening.
Eventually Desmond decided it was time to cash in his chips and Mr Carroll was more than happy to oblige, given Greencore’s major land bank that came into play after the closure of Carlow and Mallow sugar plants.
It is reckoned that Carroll is very keen on the major development at Carlow in particular, involving a substantial €1.5 billion investment to develop the site into a substantial mix of commercial and residential properties, effectively giving an entire new centre to the town.
From a Greencore perspective it is never comfortable for the senior executives to have a hostile investor just a cock’s step from making a full bid.
According to the experts Carroll’s decision to push his stake to the limit, without precipitating a bid, is a clear warning to the Greencore chiefs that, when he comes looking to buy out the Carlow site, rejection will be met by an all out bid for Greencore.
This is in fact setting up a very interesting scenario.
Greencore’s board could play this in a number of ways.
It could decide that it might be in the best interests of all shareholders if Mr Carroll did make a bid for the entire business including property and the convenience food operations, that is starting to turn in pretty robust performances.
On the other hand they may decide to do a deal on the property side with Mr Carroll and pocket at least €300m on the basis that, the land is Carroll’s main target in all of this and that he may be prepared to do a good deal.
The money could be used to bring down the debt further in the business or to buy further product to enhance its range of offerings.
If this becomes a stand off, which so far it appears to have been, with neither side saying anything about the current set up, then it could prove costly for both.
For Carroll to go hostile on Greencore would probably cost him well over €700m to buy out the group.
It’s a business he does not really want and he would have to find a buyer for it without delay.
His timing at this stage was not the best. Greencore recently announced a 38% increase in pre tax profits and its prospects have improved significantly while its share price has also started to gain momentum.
The stock is back in favour with Irish analysts and fund managers will demand a good buy out price if Carroll is forced to comes knocking.
Resolution of the issue with the property going to Carroll would be the best outcome for all concerned.
