DCC subsidiary Allied Foods is understood to have been awarded a major distribution contract with Dunnes Stores to deliver the retailer's frozen produce and some of the chilled.
Dublin-based logistics firm Sam Dennigan is believed to have won the contract from Dunnes to distribute the rest of its chilled and fresh produce. It already distributes potatoes for the multiple.
Revenue from the two deals is likely to be in the region of €200million, split equally between the two. The contracts will commence at the end of the month when the long-standing relationship between Dunnes Stores and its current distributor, Whelan Frozen Foods, ceases after a fractious legal battle that now threatens the future of almost 350 jobs.
Dunnes Stores was Whelan Frozen Foods's sole customer. The distributor reported turnover of almost €190 million in the 12 months to January 2005 and an operating profit of €1.8 million.
The company was also responsible for distributing drapery for Dunnes Stores, but these operations are understood to have been transferred to the Irish arm of UK-owned Wincanton.
Fyffes spin-off Total Produce could also be in line to pick up a milk distribution contract with Dunnes Stores.
While the food distribution contracts are likely to have been attractive, Dunnes Stores probably pushed for tight terms with Allied Foods and Sam Dennigan.
DCC declined to comment, while Sam Dennigan and Dunnes Stores did not return calls.
In 2005 Dunnes Stores sought to reduce the margins it was paying to Whelan Frozen Foods. In a subsequent affidavit, its managing director, Paddy Whelan, claimed that Dunnes Stores managing director Frank Dunne threatened to "halve" the supermarket chain's business with Whelan Frozen Foods unless the distributor cut operating costs.
DCC wholly acquired Allied Foods in 2004. At the time the distributor was generating operating profits of approximately €3.5 million. The last available accounts for Sam Dennigan, which is now an unlimited company, date from 2003. That year the State's largest potato wholesaler reported an operating profit of more than €3.7 million on turnover of almost €67 million. Directors' remuneration was more than €2.8 million.
Sam Dennigan had also invested almost €600,000 in Greenacre Foods, the Limerick-based food company that was established by food scientist Rita Ahern. It held a 39 per cent stake in the firm, but disposed of its holding in 2003.
