A merger between Greencore and IAWS is "highly unlikely", Greencore chief executive Mr David Dilger has stated.

Speculation on a link-up between the two companies intensified in recent weeks after Mr Dilger told a food conference that consolidation in the Irish food industry was essential. His remarks followed a report from ABN-Amro analyst Mr Joe Gill, which urged a merger between the two agri-business groups.

But Mr Dilger was at pains yesterday to play down the merger suggestions and said: "The crossover between the two companies is pretty low; 85 per cent of both companies' businesses are in totally different areas. The juice in the deal has been way overstated."

Mr Dilger said that Greencore would be interested in only one of the four Spillers flour mills in Britain that Tomkins has been forced to sell by the Office of Fair Trade. "Our interest is modest. We are not interested in a full bid; the mill we want would be a modest fit with Kears." Kears is Greencore's baking business in Britain.

IAWS has already made it clear that it is interested in bidding for all four Spillers mills, which would cost in the order of £60 million. Asked if he would be interested in bidding to buy his preferred mill from IAWS if IAWS was successful in buying the entire chain of four, Mr Dilger said: "We don't mind who we buy off as long as price is right."