View from City Road: Rough treatment at Fyffes

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The Independent Online
The luck of the Irish seems to have deserted its corporate sector. Larry Goodman, GPA and Greencore have all conspired to dent the image of the Dublin stock market; now it is the turn of Fyffes to give investors a nasty surprise.

The departure of a chief executive is always something that has to be explained to shareholders. But when he leaves at just a week's notice, after only two years in the job and at a time of increasing concern that the company has lost its way, shareholders need more than just explanation. They need to be reassured that the company still has a strategy and the management talent to implement it.

Fyffes has offered neither explanation nor reassurance following the resignation of John Callaghan as chief executive. It has simply put out the cliched announcement that he is to pursue 'other business interests' and refused to elaborate further.

The only reason for the 7p jump in its share price to 107p yesterday appears to be the hope that the management fall-out will tempt Dole, the US fruit empire whose 115p-a-share preliminary offer was rejected by management in April, to return.

Given that almost half last year's earnings at Fyffes derived from interest income, there is little prospect of profits growth until its Ir pounds 90m cash pile is invested. And there is a lingering concern that Neil McCann, the chairman, may be more interested in preserving the careers of his sons David and Patrick - deputy chairman and managing director respectively - than in replacing Mr Callaghan.

That makes the hope of a bid from Dole understandable.