Allegro merges operations with Fyffes subsidiary

Distribution group Allegro confirmed yesterday that it had merged its operations with Gillespies, a subsidiary of Fyffes, the fruit importers.

Both companies have operations in the Republic and Northern Ireland. The combined group's annual turnover will be £90 million (€114 million). Mr Greg Lawless, who becomes chief executive of the merged operation, said yesterday that it was on the look-out for further companies with which to merge. Allegro has undergone radical restructuring since it lost the Procter & Gamble account last year. Mr Lawless would not disclose a price for the deal but said it would involve "the introduction of some assets" into the business. It is understood that some cash was also involved.

Mr Lawless said Allegro's current turnover was around £70 million while Gillespie's was £20 million. Both companies have operations in the North - Gillespies' turnover there is around £3 million per annum, while the North accounts for around £11 million of Allegro's turnover.

The companies service the multiple, independent and wholesale grocery market. Gillespies, 90 per cent owned by Fyffes, has a pharmacy sales division which serves more than 500 independent chemists.

Mr Lawless said there was potential to expand Allegro's pharmacy business through Gillespies. At present, he added, Allegro distributed via sub-contractors.

Allegro employs 110 staff, while Gillespies has 40 employees. Mr Lawless acknowledged that merging the operations would involve some job losses, "as certain synergies are achieved".

He predicted further consolidation in the sector, saying that centralisation of the distribution businesses of multiples such as Tesco and Sainsbury had accelerated it.

Mr David Fox, who headed up Gillespies, becomes managing director with responsibility for sales and marketing. Mr Brendan Coakley becomes finance and development director. Mr Dermot Divilly, Allegro's chairman, joins the board, along with Mr Patrick Meade and Mr Carl McCann. Mr Divilly recently acquired the distribution rights to Allegro's Roma range of pasta food products, under an MBO, for an undisclosed price.

Mr Lawless said the company would be a joint venture. Allegro's ultimate holding company is Azinger whose shareholders include Mercury Asset Management (35 per cent), ACT (20 per cent), Mr Lawless, Mr Divilly and Mr Bill Higgins (who hold 20 per cent between them) and institutions such as Standard Life, and Norwich Union.