Greencore could sell malting business

GREENCORE, which has developed a major footprint in the convenience food sector in Britain, is likely to sell its malting business to the French Soufflet Group.

The Irish Examiner understands a deal worth €120 million could be on the cards with Soufflet, but that has been denied.

Chief executive Patrick Coveney, said yesterday: “We don’t have an offer from them.”

He denied also that the group would make the announcement next week when the group issues its end of year results.

It has been widely reported that the group, in which the failed property developer, Liam Carroll, holds a 29.7% stake, has had a number of approaches for the business.

Axereal, the other major malting operator in France has also expressed an interest in the business along with a number of other players in the market.

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.

It has made no secret of the fact that it sees its long-term future in convenience foods which is headquartered in Britain, with interests in the US market.

At the group’s AGM in February Mr Coveney said Greencore expected to double its US convenience food sales every year for the next five years.

That implies the group will be generating sales of $750 million to $1 billion within that time, comparable to what it will be doing by then in Britain.

The business Greencore acquired last year in the US has significant additional capacity and the group hopes to use it to service the US business as it evolves.

Recently the group announced it had finally severed all links with the Irish sugar industry it once dominated though its Irish Sugar subsidiary, which it finally exited last year.

Since Mr Coveney took over as chief executive he has made it clear he sees the group’s future in convenience foods serving the US and Europe.

Greencore’s malting business is also regarded as attractive to outside buyers.

It is Europe’s third-largest malting company producing over 500,000 tonnes of malt annually.