Business Irish

Saturday 24 February 2018

Greencore shares soar 10pc hours before firm reveals takeover talks

Pressure on stock exchange to probe huge trading volumes prior to announcement

Peter Flanagan

THE Irish Stock Exchange was under pressure last night to launch an investigation into trading in Greencore after the stock surged hours before the firm said it was in talks to be taken over.

Shares in the company soared nearly 10pc in early trading on huge volumes, before Greencore confirmed it had been approached by an "unnamed party" to take over the company.

A spokesman for the Irish Stock Exchange did not comment on whether it would probe the trading.

In a statement, Greencore said it noted "the movement in the company's share price and confirms that it has received an approach which may or may not lead to an offer for the company".

Discussions

"The board would like to emphasise that the discussions are at a preliminary stage and there can be no certainty whether any offer will be forthcoming," it added.

The buying spree is believed to have come from London, where brokers were said to be "buying up any Greencore stock they could get their hands on".

While Greencore did not reveal who it was in talks with, attention immediately turned to private equity. Analysts said a trade buyer, such as Kerry Group which has long been linked with the ready meals maker, was unlikely.

Doughty Hanson, the owner of TV3, was reported to have approached Greencore over the summer but it is not thought to be involved this time.

There are still several private equity players that could be a fit for Greencore -- including Lion Capital, a former investor in Aryzta and Wagamama noodles.

The takeover, if it went through, would cap a tumultuous year for Greencore and its chief executive Patrick Coveney, who agreed a merger with the UK's Northern Foods (NF) last November only to be effectively gazumped by the businessman Ranjit Boparan who ultimately bought NF in March.

Mr Coveney fought hard to make the Northern Foods deal go through, bringing in a private equity firm to make a joint bid for the company before ultimately conceding defeat.

He followed that up with a successful bid for the British sandwich maker Uniq during the summer in a deal worth close to £113m (€129m).

Shore Capital's Clive Black was not surprised that Greencore could be a takeover target: "Greencore's valuation has been detached from its peers for some time now so we aren't particularly surprised that someone has entered talks to buy the company.

"There have been several reports of firms running the rule over Greencore since the conclusion of the NF saga and it is relatively undervalued compared to its peers," he said.

"In any case we don't see a branded business coming in for Greencore, which is now focused on the own label space."

There was also speculation that management could be involved in the bidding, but yesterday's statement appeared to rule that out.

Under takeover rules, if any management were involved, they would be required to make public their interest immediately and excuse themselves from the talks.

Greencore rose as high as 22pc in afternoon trading before falling back to 68c, for a gain of 9.5pc and valuing the firm at €270m.

Irish Independent

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