Carroll set to build stake in Greencore to 29.9%

Liam Carroll, the property developer, is likely to re-enter the market for Greencore shares to build up his 21.57 per cent stake in the company towards the 29.9 per cent level that would trigger a mandatory bid, according to senior market sources.

Mr Carroll marched onto the scene this week when he spent €170 million buying the stake built up several years ago by the financier Dermot Desmond. His sudden entry comes as the Minister for Agriculture, Mary Coughlan, prepares to determine next week whether Greencore should get the 90 per cent share it claims from a €145 million EU compensation fund for changes to the sugar regime. That claim is strongly disputed by the Irish Farmers' Association, beet growers and other interests.

Mr Carroll's stake is already big enough to block any rival bidder from compulsorily acquiring his shares. But market sources believe it will not be sufficient to secure control of Greencore's valuable property portfolio, the presumed objective of his entry into the company.

The sources believe, therefore, that he will seek to increase his stake. In one scenario that is the subject of current market speculation, he would move swiftly to raise his stake towards 29.9 per cent. By doing this he would strengthen his hand in any discussion with Greencore because he could offer to buy the portfolio as an alternative to mounting a full bid for the company.

However, the sources said such a manoeuvre might present regulatory difficulties over the sale of a significant company asset to a single shareholder. With that in mind, they said Mr Carroll might well be tempted to mount a full bid for the company.

In that scenario, he would divide the property assets from the food side of the business and ultimately sell the food unit. He would then be left with a significant portfolio of development land. This includes 200 acres of prime property in Carlow, on the site of the former sugar factory, and a big site at Littlehampton near Gatwick Airport in London.

Buying the company outright would cost at least €807.29 million on the basis of yesterday's closing price on the Dublin market (€4.10, up 2 cent). However, sources believe Mr Carroll is wealthy enough to go down that road. In advance of that, however, they say the next logical step to proceed quickly with the acquisition of another 8.33 per cent in Greencore to bring his stake to 29.9 per cent. Known as a strategic thinker and a tough deal-maker, he may already be planning such a purchase.

Greencore's properties have a book value of only €40 million, a sum that seriously underplays its true value in the booming property market. One recent valuation said the Carlow site was worth €150 million.