IIU tipped to benefit following Greencore share sale

Shares in Irish agribusiness group Greencore leapt to an 18- month high yesterday as its third largest shareholder sold its stake.

Sprucegrove Investment Management offloaded its 6 per cent stake in the group, with the buyer said by market sources to be Mr Dermot Desmond's investment vehicle IIU Ltd.

IIU previously held 15.5 per cent of the shares in Greencore. If confirmed as the purchaser, it would become the largest player in the group, holding 21.5 per cent of the stock, with Bank of Ireland Asset Management at 16 per cent the only other investor holding more than 5 per cent.

Greencore's shares jumped 30 cents to €3.20 yesterday, a level not seen since May 2002. A spokeswoman for the company said it would not comment on the movement in the share price nor on any buyer or seller of shares.

No-one was available for comment from IIU Ltd.

Mr Desmond's IIU vehicle first bought into Greencore in December 1999, initially acquiring a 5.3 per cent stake. It gradually raised that holding to 13.85 per cent in the first half of 2000 as management considered the prospects for a management buyout that was ultimately ruled out.

By February 2001, his 14.4 per cent stake was sufficient to thwart the company's plans to facilitate the late Bernie Cahill's re-election as chairman of the group.

Since then, IIU has returned to the background. Mr Desmond, as is his custom, has never indicated his intentions in relation to Greencore and has not made any effort to date to seek board representation.

Greencore, which faces pressure in its sugar business as the EU introduces reform in the sector, recently issued a relatively upbeat statement ahead of results due on November 25th.

Speaking just ahead of its close period, chief financial officer Mr Patrick Kennedy said the group would meet analysts' expectations. The guidance, against a background of a summer heatwave and a strengthening euro, was seen as indicating a "resilient" performance compared to its peer group.

Greencore, which began as the State sugar company, now operates in flour, malt, convenience foods and agri-chemicals. It is the largest supplier of sandwiches in the UK.