Greencore board sharply criticised

THE board of Greencore was condemned yesterday for the high salaries being paid to top executives and for its failure to deliver on the share price, which has fallen to €1.14 following the collapse of the proposed merger with Northern Foods.

Disgruntled shareholder Daniel O’Riordan, commenting at yesterday’s EGM on the lack of progress by the company over the past 10 years, said instead of trying to merge with Northern Foods “we should be taken over so that we can get out of here”.

As a group “we have embarrassingly fallen on our faces,” he added.

At the AGM that followed the EGM another stakeholder described the €4.5 million paid in salaries to the top four executives as “obscene”.

Group chairman Ned Sullivan, who had his competency questioned as chair of Greencore given his directorships in the failed Anglo Irish Bank and McInerney Properties, defended the salary rates of his top executive team.

The group took outside advice both in Ireland and Britain before the remuneration packages were agreed, he said.

On the vexed question of its merger plans with Northern Foods, Mr Sullivan told the AGM that the board is looking at its options, following the surprise €400m bid from British food group Borporan in mid-December.

Greencore and Northern Foods announced merger plans in November, but Northern Foods withdrew its support earlier this month in favour of a cash offer from businessman Ranjit Borporan, a major supplier of chickens to Tesco in Britain.

Patrick Coveney refused to say if Greencore would now go the whole hog and make a counter cash offer for Northern. At the appropriate time the group will make its next move known to the markets, he said.

He refused to say if the group had the financial muscle to mount an alternative cash bid for the business.

He added his board acknowledged the importance of cash to the Northern board following its acceptance of the all-cash bid it recommended to its shareholders.

Both Northern and Greencore held EGMs yesterday when the merger vote was postponed to allow Borporan to put his €400m offer formally to Northern’s stockholders.

Coveney said he did not regret going with a cash bid in the first instance.

The company took the approach it did “because we thought that gave the appropriate balance to all of our stakeholders of opportunity and risk”.

And he added the reaction to the merger proposal “from all our stakeholders was extremely positive”.

“I don’t think there was anybody out there who felt that this wasn’t a good answer that was consistent with the right strategy for Greencore going forward.”

Northern’s shareholders got “a 30% increase in the share price the day we made the offer” and Coveney said that merger proposal, which envisaged taking about €40m in costs out of the business, was seen by the market as making commercial sense.

“Our job is to create the right way of creating value for shareholders going forward.

“It’s a matter for us and our board to determine how we respond,” he said

As to the final outcome, Coveney said “if you pull out all the different analysts’ notes there is no alignment on what’s going to happen,” he said.

He reiterated he would “not be drawn” on thepossibility of a cash offer except to say “that our board would be acutely conscious to look at the risk and return involved in such a process”.

“Our job is to create the right way of creating value for shareholders going forward,” he said.

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