Greencore management told shareholders yesterday that the food company would deal with any takeover approach for its business "if and when it happens", but said it could not comment on speculation that Icelandic investment firm Exista had amassed an 8 per cent stake, writes Laura Slattery.
Greencore chairman Ned Sullivan criticised the lack of any disclosure requirements for investors who use contracts for difference (CFDs), which allow holders to have an economic interest in a company without directly owning shares or having to disclose their interest, to build up a stake.
It has been speculated that Greencore, which holds significant property assets, could be carved up between Exista, which has other interests in the food sector, and property developer Liam Carroll, who holds 29.9 per cent of Greencore, the maximum allowable before he must make an outright bid.
"If it happens, if somebody approaches us, then we'll deal with that if and when it happens," Mr Sullivan told shareholders at the company's annual general meeting in Dublin.
He added that, although he had seen the speculation, there had been no disclosure by Exista.
"If people have built beneficial interests in the company through CFDs, they don't have to disclose it to us. In my personal opinion, while it is legal, it's not in the best interests of a fair and transparent functioning of the market," Mr Sullivan said.
"Greencore does not need a change of ownership to implement a strategy that would generate significant value for shareholders," he added.
The food group's strategy includes obtaining rezoning and planning permission for its four major property sites in Mallow, Co Cork; Carlow; Athy, Co Kildare; and Littlehampton in England. Cork County Council has voted to include the 400-acre Mallow site of Greencore's former sugar plant in its special local area plan for Mallow, and a decision on the development is expected within the next few weeks.
Greencore is also seeking changes to Carlow County Council's draft local area plan, which includes the site of its other former sugar factory.
Greencore's convenience foods division will be hit by a weak sterling, which, if it continues, will reduce operating profits by about €8 million and cut pretax profits by €6 million, the company warned.
About 80 per cent of its total business is denominated in sterling, as Greencore's core business is in the manufacture of sandwiches, cakes and other prepared foods for retailers in the UK.
The problems posed by the unfavourable sterling-euro exchange rate have been compounded by the UK's economic slump, which has led to "some evidence of a limited consumer slowdown", Mr Sullivan said.
But chief financial officer and chief executive designate, Patrick Coveney, said he would characterise the environment as being one of "genuine uncertainty" rather than a definite slowdown.
"Consumers have still got to eat. The categories we play in have historically in volume terms been largely unaffected by recession," he added.
Greencore is diversifying into the food service channels and has been conducting an 18-month study of the US market, where it is currently looking for "a modest acquisition", Mr Coveney said.
The group also said it had passed on the higher cost of raw materials to its customers and would receive a cash boost at the end of the month, when it receives a final instalment of €83.4 million in EU restructuring aid following its forced exit from the sugar business.
