Greencore shares have been decidedly soggy since it announced its €582 million (£458 million) acquisition of Hazlewood Foods two weeks ago, with its share falling back from €2.85 to €2.55. That makes the cost of the deal a lot more than Greencore's current stock market value.
The market seems to be sending a signal that the jury's out on the Hazlewood deal and will remain out until there are clear signs that Greencore is sorting out Hazlewood's problem areas and realising the €150 million of asset sales that David Dilger said he intended to make in the first 18 months post-acquisition.
The general view among analysts is that the Hazlewood deal is a good one for Greencore and that the management - well-versed in cutting the fat out of loss-makers - will do the needful at Hazlewood. If one believes that Greencore will deliver what it says at Hazlewood, the shares are decidedly cheap, with Merrion Stockbrokers forecasting a 2001 price/earnings of 6.4 and a 2002 multiple of 5.5.
But nobody in the market believes that there is much upside in Greencore shares in the short term and that it will be the May interim results before the company gives an indication on how Hazlewood is being integrated.
