Greencore fends off Exista move

GREENCORE chief executive David Dilger warned the company’s Icelandic suitor, Exista, could be gobbled up by Greencore if it attempts a takeover of the Irish convenience food group.

Exista, capitalised at €1.4bn against €863m for Greencore, has in recent weeks built an 18% stake in the Irish group, using Contracts for Difference (CFDs).

Recent reports claimed three Exista board members have built up an 18% stake in the group, fuelling bid speculation. Exista has declined to comment.

It has been speculated that Exista could buy Greencore and sell off the property division to Liam Carroll who holds a 29% stake in Greencore.

If faced with a bid, Mr Dilger did not rule out a counter offer for its bigger rival .

“That’s an issue for consideration at some future date — everything is open to Greencore”, he said. It was not in the board’s interest “I believe, to be launching an attack on one of its competitors” though the press. “That would be a very unlikely place for a bidder to start — you can draw your on conclusions“, he said.

At the AGM, chairman Ned Sullivan said “Greencore does not need a change of ownership”, in response to a question, adding the use of CFDs to build a stake in any company was bad for the “functioning of the market”.

He warned shareholders in his statement the strength of the euro against sterling could knock around €6m off pre-tax profits for the current financial year.

If the euro-sterling rate stayed within the 74-75p range that was the likely loss in the currency translation for the year, he said.

Demand for convenience foods had held up in the first quarter, which began in October and there was some evidence of a ‘limited consumer slowdown’ in January.

In the current year, managing significant food inflation was the main challenge in this sector.

Greencore had been “successfully working with customers to offset this impact.

Recovery in Greencore’s ingredients business had continued into the current year, he said. “Strong growth” was expected in both divisions for the full financial year.

It emerged yesterday the group is looking seriously at expansion options in the US where it has a small team carrying out market research for the past 18 months.