Greencore to make €20m profit in sale of malt unit
GREENCORE plans to sell its malt business to a Belgium-based malt group for €116.3m as it specialises on convenience foods such as sandwiches, sauces and sushi in Britain and the US.
Greencore will make a €20m profit from the transaction, chief executive Patrick Coveney told shareholders at the company's annual general meeting yesterday. The shareholders will have to gather again within a few weeks to vote on the sale, which Greencore hopes to complete by the end of next month.
"This gives the company more flexibility in relation to its expansion plans, not only in the US, but also selectively in the UK, where the market is looking more attractive for manufacturers," Goodbody analyst Liam Igoe said.
The sale of the malting business is the last step in Greencore's transformation from a state-owned sugar and malt company into a publicly quoted convenience food maker, which makes 90pc of its sales outside Ireland.
The company does not expect to make any further sales of any significance, Mr Coveney said after yesterday's meeting.
"It's a different business," Mr Coveney told shareholders. "It had no overlap in customer base" with the convenience food business, he added.
Greencore's malt operations employs around 200 people in Athy, Co Kildare, the UK and Belgium. Boortmalt, the malt company that is buying the units and that ultimately belongs to French farmer-owned co-op Axereal, has no plans to close the Athy unit, chief executive Yvan Schaepman told the Irish Independent.
"It is fair to say that Minch is here to stay," Mr Schaepman said. Malt production is a low- margin business and it is necessary to stay close to customers, he added. He praised the Athy plant for its modern production equipment, which matched the best plants elsewhere in Europe.
Boortmalt will move from the world's seventh largest malt company to fifth biggest with 11 plants in Europe if the deal is approved.
David Wilkes, the current boss of Greencore Malt, will join Antwerp-based Boortmalt as deputy chief executive under the deal. The Irish Farmers' Association (IFA) was quick to express concern about the deal, with IFA president John Bryan demanding that malt growers' contracts must be guaranteed into the future.
Mr Bryan called on drinks giant Diageo, the main buyer of Irish malt, to give a commitment to support growers.
Greencore needs more capacity in the US and may grow either organically or through acquisitions, Mr Coveney said. "It's clear to us now we have to get some additional capacity." Shares closed down half a cent at €1.32 in Dublin after rising as much as 5pc during trading.