The four former International Meat Packers executives who set up Rye Valley Foods in 1986 will become millionaires as a result of the takeover of the company by Golden Vale for an initial £16.5 million in cash.

The four executives managing director, Mr Pat Doyle; finance director, Mr Eddie Fitzgerald; operations director, Mr Pat O'Leary; and technical director, Mr John Somers own 41 per cent of Rye Valley and will share £6.7 million. ICC Venture Capital will receive £6.6 million for its 40 per cent and Forbairt £3.3 million for its 19 per cent of the company.

As well as the initial £16.5 million cash payment, the deal includes deferred payments of £2.9 million, subject to profit targets being met for the years ending December 31st, 1999 and December 31st, 2000. Rye Valley had sales of £30 million and profits after tax and after preference dividends of £1.6 million in the year to October 1997. It has net assets of £7.7 million.

Golden Vale chief executive, Mr Jim Murphy, said the acquisition of Rye Valley was part of the company's strategy of expanding its consumer products business and reducing the current dependence on milk processing.

Rye Valley manufactures own-label prepared meals for supermarket multiples in Britain and Ireland. It operates from a purpose-built facility in Carrickmacross, Co Monaghan, and employs 400 people.

"The prepared foods business has grown rapidly in recent years and is continuing to grow. We have a situation now where customer-label products are taking market share from branded products and that is Rye Valley's strength," said Mr Murphy. He added that Rye Valley had had strong sales growth in recent years from £19 million in 1995, to £26 million in 1996 and £30 million last year.

Mr Murphy said the aim was to double Rye Valley's turnover in the next three to five years and added that Golden Vale was keen to ensure the management team stayed on. That explains the £2.9 million earnout in the consideration.

Rye Valley Foods is one of a number of successful Irish food companies that were established under the IDA's Enterprise Development Programme in the 1980s. That programme provided support and backing for executives in Irish companies to set up on their own. It has been highly successful in the food sector and provided the initial backing for not only Rye Valley, but also companies such as Green Isle now owned by Northern Foods and Monaghan Mushrooms.

Mr Doyle was general manager of International Meat Packers (IMP) consumers' products division. In May 1986, he and his three colleagues left IMP to research the prepared meals market and source finance for the start-up company. Principal funding for the company came from EU Feoga grants, the IDA and early support from Goodman International. Later support came from ICC Venture Capital.