Greencore slumps as talks end
SHARES in Greencore plummeted yesterday, after the sandwich-maker confirmed talks to take over the company had broken down.
Greencore had been in negotiations with an unnamed firm, believed to be the American private equity house Clayton, Dubilier & Rice, since October.
The news that a takeover could be in the works saw shares in the company rocket at the time, but yesterday the Irish company said those talks had now ended.
"Such discussions were entered into with a view to establishing whether a proposal acceptable to the board, which could then be put to shareholders, would be forthcoming.
"Given the board's unanimous view on the strong underlying value of Greencore and the current dislocation in global equity and debt capital markets, both parties have agreed to end discussions.
"The board can confirm that the company is no longer engaged in any discussions regarding a potential offer for the company," the statement added.
The statement sent the stock crashing, falling as much as 14pc before finishing some 10.56pc off its opening at 64c.
Company chief executive Patrick Coveney was unavailable for comment last night.
The failure of the talks was greeted matter-of-factly by analysts, who began to switch their focus to Greencore's annual results, which are released this morning.
Bloxham Stockbrokers said today's results would be closely watched after the collapse of talks.
"This switches focus immediately back to current trading and full-year results will be watched closely in that context.
"The company must show an ability to wring out a material [earnings] increase in full-year 2012 if bid-connected valuations are to be sustained," they said.
Clive Black at Shore Capital, who has been bullish on Greencore for some time, described the company as "significantly undervalued" and reiterated his "buy" recommendation.
"We highlighted that we find it difficult to believe that a potential acquirer would pay a premium to the current price," said NCB's Darren Greenfield. Ranjit Boparan paid more for Northern Foods in a slightly more optimistic environment earlier this year.
The October announcement of a possible bid for Greencore raised eyebrows at the time, with few market-watchers seeing the logic in such a bid.
Mr Coveney's company was deemed vulnerable to a bid during the spring after it lost out on a merger with Northern Foods but that moment was thought to have passed after the company successfully took over the British sandwich company Uniq in July.