Saturday 19 January 2019

Ex-US ambassador O'Malley joins in Greencore defence

Former US ambassador Kevin O'Malley
Former US ambassador Kevin O'Malley
John Mulligan

John Mulligan

Former US ambassador to Ireland Kevin O'Malley is the latest Greencore director to come to the defence of the world's biggest sandwich maker after a lost contract with Starbucks sent its shares into a tailspin.

Mr O'Malley has made a token gesture in support of the food group, buying just under £40,000 (€43,600) worth of shares in the company this week.

The purchase comes just days after Greencore chief executive Patrick Coveney also underscored his faith in the business by buying just under £100,000 worth of shares in the business as investors fretted about the impact of the lost contract on the Irish firm, whose shares are listed in London.

Chairman Gary Kennedy also increased his stake in the company.

Greencore shares tumbled 14pc in just two days last week as investors became aware of the loss of a contract the group has with Starbucks. That prompted Greencore to issue a statement noting that the loss of the business at its Jacksonville plant in Florida would have minimal impact on the group.

Greencore said it has decided to exit frozen production at the Jacksonville factory and refocus on fresh sandwich production.

Frozen production at Jacksonville is almost exclusively undertaken for Starbucks.

Some investors believed that Greencore should have revealed the contract loss at the end of July when the company issued a third-quarter update.

But Greencore management are thought to have believed that the loss of the contract was not sufficiently material to warrant a market announcement.

New York-based investment bank Jefferies also defended Greencore's business model and prospects, arguing that the steep sell-off was overdone.

Shares in Greencore were 1.3pc higher at £2.07 in London yesterday.

Kevin O'Malley joined Greencore as a non-executive director earlier this year, just weeks after vacating his ambassadorship.

Greencore has been expanding significantly in the US.

In a transformational deal for the group, it sealed a $747m acquisition in January of Illinois-based Peacock Foods. Peacock has annual sales of about $1bn.

Irish Independent

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