Dublin stunned as Greencore sale turns into farce

THE IRISH government's placing of shares in Greencore descended into farce yesterday when the broker responsible for the sale admitted that it had breached the food company's rules on share ownership.

Greencore's shares were suspended after J&E Davy, the government's broker, said that companies in the Bank of Ireland group, of which it is part, jointly held more than 15 per cent of Greencore's shares following last week's placing of the government's 30 per cent stake. Greencore's articles of association forbid investors to hold more than 15 per cent.

The news stunned the Dublin stock market, where brokers dubbed the affair 'Green Arrow'. Greencore's shares were suspended in London and Dublin at 272p, 3p below the placing price, and the Irish Stock Exchange announced an inquiry. In parliament, Bertie Ahern, the finance minister, attacked Davy and said the repurchase of shares by the government was one option to resolve the mess.

'I am seriously concerned and disappointed that important steps were taken by Davy's without either my knowledge or agreement', he said.

The placing apparently went sour when Davy backtracked on an agreement to place 10 million of the 25 million shares on offer with SG Warburg. Sources in Dublin said Davy then could not find enough external buyers for all the shares and placed them with associated companies in the Bank of Ireland group. The limit was breached because one of the bank's subsidiaries held just under 15 per cent of Greencore before the placing.

Davy's chairman, Brian Davy, said his firm had asked its solicitors for advice on the 15 per cent rule and it had taken two days to confirm that the limit did apply.

He said Davy had not gone ahead with the deal with Warburg because it believed it would not be in the interest of the placing. Warburg would not be seen in the market as a normal holder of Greencore shares and would be likely to sell them on, he said.

Other Dublin brokers expressed incredulity that Davy had not appreciated the implications of the 15 per cent rule. One observer said: 'The 15 per cent issue was splashed all over the newspapers when the sale of the stake to ADM (the US food giant) was mooted - I would bet that every taxi driver in Dublin knew all about it.'

Liam Igoe, an analyst at Goodbody in Dublin, said: 'This is a bad day for the Dublin market, and is a great shame for Greencore, given the company's strong fundamentals.'

Greencore declined to comment, but its senior managers were said to be furious that the government and the brokers had failed to get the placing away without controversy.