Coveney kick-starts Greencore
EVER since he took over as Greencore boss in March 2008 it has been clear that Patrick Coveney needed to do something to kick-start the former Irish Sugar Company.
Despite spending almost stg£350m on British food company Hazlewood Foods in 2000, Greencore has been merely treading water for most of the past decade.
Last week Coveney finally made his move when Greencore announced that it was merging with UK food company Northern Foods, best known in this country as the owner of the Goodfella's frozen pizza brand.
The merged company, which will be headed up by Coveney, will be renamed Essenta, (what an awful name).
Essenta, which will be listed in London with a secondary listing in Dublin, will have annual sales of almost €2bn and annual operating (pre-interest) profits of over €120m. Coveney also reckons that he can strip over €40m in annual costs out of Essenta.
Coveney's problem is that the vast bulk of Essenta's output goes to a handful of UK multiple customers, mainly M&S, Sainsburys, Asda and Morrison. His challenge will be to ensure that Essenta's shareholders derive most of the benefits of the merger rather than allowing them to be captured by the supermarkets in the form of lower prices.