Desmond has eye on Greencore

Greencore shares have staged a modest recovery in the past few days - and one can only assume that some investors are punting…

Greencore shares have staged a modest recovery in the past few days - and one can only assume that some investors are punting on the basis that Dermot Desmond hasn't bought €35 million worth of the company's shares unless he believes he is going to make a sizeable profit.

It's hard to see any other reason to buy the shares at the moment, and it will take an acquisition of Perkins Foods at a very good price to restore belief in a management that has not shown any clear strategy to grow the group in the way that IAWS has been driven into consumer foods with huge success.

Greencore is currently involved in at least an indicative bid for the British group Perkins Foods, a bid that has apparently degenerated into a row between the Perkins chairman Michael Davies, who supports an offer from Greencore, and other Perkins board members who prefer another management buyout offer backed by venture capital groups Natwest Equity and Phildrew Ventures.

At present, the market doesn't seem to have much faith in any deal being done for Perkins, with its shares trading below 120p sterling compared to the indicated offer of 140p from the MBO group and a similar offer from Greencore, which pulled an offer of 150p a share back to 140p when it heard of the discussions with the MBO group.

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But apart from the Perkins speculation, there is gossip in the British market that Greencore could become involved in bidding for part of the British foods group, Tomkins, possibly as a partner for the US investment group Hicks Muse Tate and Furst.

Hicks Muse has already bought into the British foods sector by buying Hillsdown and is currently slugging it out with a French consortium for control of United Biscuits.

At least four venture capital groups are thought to be running the rule over part of Tomkins, whose assets include household names like Hula Hoops and Jaffa Cakes.

Other buyout groups are casting their eyes over food companies, and TheStreet.co.uk has speculated this week that Greencore itself, along with Unigate and Hazlewoods, is a potential target. Could this be the real reason that Dermot Desmond has ploughed €35 million into Greencore?