Greencore's decision to allow its stake in Imperial Holly to fall from 27 per cent to 16 per cent, following Imperial's £370 million takeover of Savannah Foods last year seems to have been vindicated. Imperial has reported losses in the final quarter of 1997 and warned of "unsatisfactory" operations at one of its main sugar refineries.When Greencore announced its full-year results before Christmas, the chief executive, Mr David Dilger, said the Irish group was content to be diluted and become, in effect, a smaller shareholder in a bigger American sugar company. But since the Savannah acquisition was completed, the Imperial shares - listed on the American Stock Exchange - have slumped and were trading yesterday at a 12-month low of $8 3/4 and well below the $16 high when the Savannah takeover was completed last September.Analysts had been sceptical about the Greencore investment in Imperial Holly. The fourth quarter results, together with comments by Imperial chief executive James Kempner, will leave analysts feeling that they have been vindicated in their cautious view.There has been a feeling on the Irish market that the American sugar industry is heading into a period of plant overcapacity and overproduction of sugar beet and cane. Mr Kempner said that Imperial's operating results were hit principally by lower sugar prices as a result of a larger American sugar beet crop.The group was also hit by higher costs at its Sugarland cane refinery and Mr Kempner said that management had been replaced at the refinery where operations had been "unsatisfactory".He added, however, that Imperial aims to generate $40 million cost savings from the merger with Savannah.Greencore holds its annual general meeting next week, by which time shareholders will be hoping for some white smoke on the group's bid for the Pauls Malt subsidiary of Harrisons & Crosfeld.The sale of the H&C subsidiary has become a protracted affair, but a successful bid for Greencore is seen in the market as of enormous importance to Greencore, which has been looking for a substantial acquisition for some time.If Greencore is unsuccessful in a bid for Pauls - which is likely to be sold for around £70 million - then it will undoubtedly fuel demands from shareholders for a share buyback.