Dáil Éireann debate -
Tuesday, 4 May 1993

Vol. 430 No. 2

Adjournment Debate. - Sale of Greencore Shares.

Mr. Cox

I welcome the opportunity to raise this matter on the Adjournment. Last week I noted the frustration of many Members of the House, as indeed you did Sir, when our roles of procedure failed to give us the opportunity to raise this matter on the day when it was perhaps uppermost in people's minds. Last week's sale of Greencore shares by the Government represents a failure in terms of policy, politics and will. It is a further debacle for the Minister for Finance in particular and the Government in general in terms of their reputation and dealings with the business community.

With regard to the failure of policy, I find it deeply ironic that a few days in advance of the Government's announcement of its so-called commitment to the Culliton report, it was announced yesterday with an extraordinary fanfare by the Labour Minister for Enterprise and Employment and his junior Ministers in that Department, that the disposal of the Government's shares in Greencore should have flown totally in the face of the recommendations of Culliton. That report clearly acknowledged the need for further study of Irish food industries — I acknowledge that — but it still contained some basic recommendations. It recommended, in particular, that the food industries' performance in Ireland could be significantly improved by a greater and selective involvement in the industry by multinational companies with access to the market and to best industry practices.

A linkage between ADM, Archer Daniels Midland, and Greencore was straight out of the Culliton philosophy, and it should have been jumped at by the Government. ADM is a major player on the world agri-business stage, employing 13,000 people and with sales of over £9 billion per annum. As a minority partner for Greencore, ADM offered extraordinary and diverse access to market intelligence, to open up global markets for products, to high class technology and to best international practice in terms of agri-business management. To have failed to secure such a player as an active partner for Greencore, which that company's management clearly recognised as being in its company's best interests and which the Culliton logic would insist is in the nation's best interest, discredits the Government and the Minister for Finance in the disposal of these shares.

Sadly, I think the reason ADM has been lost to Greencore arises from a failure of politics at the core of Government itself. The head of the Minister for Finance, which seemed fairly clear in his earlier contributions to this House, was overruled by the heart of the Labour Party which a few months ago did not want any privatisation at all and the next month changed its mind but did not know how best to exploit it in the nation's overall interest. This anti-Culliton gesture in practice from this pro-Culliton Government in theory is yet another example in its early days of a confused Administration where the blind are leading the blind from one policy cul de sac to another. The Progressive Democrats Party supports the sale of the Greencore shares. There was no point in the Government staying on as a large passive minority shareholder in a company clearly bursting at the seams to develop through the market. However, to have disposed yet again of a large volume of Government-held shares by rounding up the usual institutions is a lost opportunity and a glaring failure of will. The Minister for Finance knows that ADM was the ideal partner for Greencore — he said as much in this House. The decision not to sell the shares to ADM and the blunder of letting them slip through the net comes down to a failure of will on the part of the Minister to insist on doing what he knows to be right and correct instead of letting the qualms of his confused partners in Government rule the day. For a Government ostensibly committed to an enterprise culture, it is about time we saw some real evidence of its ability to do business with business. The creation of an enterprise society requires more than rhetoric, press conferences and new brass plates on ministries in Kildare Street. As I said at the outset, the failure to sell the shares to ADM is a policy failure, a political failure and, most of all, a failure of will on the part of the Minister for Finance who has to answer for this tonight.

Minister for Finance (Mr. B. Ahern)

As I have stated publicly, the termination of my discussions with Archer Daniels Midland, ADM, the US-based food major on their possible purchase of the State's residual shareholding of 25 million shares in Greencore plc was on the initiative of ADM. The Government is fully cognisant of the value to the economy of the businesses which ADM own and operate in Ireland and had welcomed their interest in becoming a long term partner of Greencore, which would have assisted development of the indigenous food sector. I am hopeful that their contribution to the economy will continue and increase.

With regard to the sale of its shares to ADM, which would have given them a holding of 25 per cent or more, the Government made it clear that it would facilitate the waiver of the requirement, in the Greencore articles of association that no shareholder could hold more than 15 per cent of Greencore's shares. This would have required the consent of the Minister for Agriculture, Food and Forestry, as the special shareholder, and a vote by the shareholders at an extraordinary general meeting.

I would emphasise that the safeguards and protections conferred by the special share remain very firmly in place, and would have done so even if the sale to ADM had gone ahead. The special share protects the company from take-over and prevents any alteration in the articles of association — the constitution of the company — without the consent of the special shareholder. I would repeat that the sugar quota is a national question — it is not a Greencore quota — and cannot be taken out of the country no matter who owns the shares in Greencore.

Much comment has been made to the effect that the Government should have retained a strategic share in Greencore. This makes no great sense. It had been made clear at the flotation that the Government would not take up any rights issues which the company might seek from the market in due course. Any such rights issues would de facto dilute the Government stake. Furthermore, those rights issues would have been made difficult by the overhang of the Government shareholding. The retention of its shareholding would, therefore, have acted as a continuing drag on the development potential of the company. Therefore, the sale of the Government's shares was in the best interests of the company's future development.

In my statement to the House on 3 March last, I made it clear that the initial advice I received from Davy Stockbrokers, my advisers in this matter, was that a share placement was the appropriate way to dispose of the Greencore shares which I then held. The management of Greencore had, however, come to the conclusion that the future growth and development of the company would be best served by entering into a strategic partnership with another company. They sought a partner who would provide strengths complementary to Greencore's own in the areas of technology, access to markets, etc. Their choice of partner was, of course, ADM.

The sale of the Government's shares to ADM, and consequent alliance between ADM and Greencore, then came into the picture. The attractions of this outcome for Greencore were clear, but in the light of concerns that were expressed I allowed time for other groups to make offers. In the event no comparable offer was made although there had been much comment to the effect that an Irish food group or groups would bid for the Government's shares.

Negotiations with ADM then took place, but eventually ADM withdrew. That was, of course, their privilege. I then reverted to what Davy Stockbrokers had originally advised and disposed of the shares by means of a placement at a very satisfactory price. As is usual, and necessary, in deals of this kind, my advisers made discreet soundings in the market, without publicity. On the day of the placement itself, again following the usual market practice, they completed the sale within hours.

Although certain voices have been raised in criticism of this deal, I believe it to have been in the best interests of the company and the Government. I was glad to note the statement issued by Greencore's chief executive, Mr. Gerry Murphy in which he said:

We were particularly pleased at the positive market response to the placing and the successful take-up of the shares by Irish and overseas institutions. The Government's sale and the inclusion of Greencore in the Morgan Stanley Capital International Index for Ireland will be a further positive boost to the wider ownership and liquidity of our shares.

With regard to the future of Greencore, I am confident that it will involve further growth and diversification and that Greencore will make a substantial contribution to the economy and to employment in the years ahead. However, as Greencore is now a privately owned company, its corporate strategy, including possible alliances with other companies, is a matter for the company itself.

The Government is fully committed to the food industry in Ireland, its growth and development, and will be studying carefully the recent report of the Expert Group on the Food Industry in this regard. I am most anxious that all possible opportunities for growth in employment and value-added within Ireland should be fully exploited. In addition, the development of the food industry has the potential to offer our farmers improved outlets for their produce and opportunities to diversify their output.

I thank Deputy Cox for having given me the opportunity of placing these matters on record. I might confirm for him that the decision of the Government some weeks ago was to allow me, as Minister for Finance, in consultation with my colleague, the Minister for Agriculture and Food, to conclude discussions with Archer Daniels Midland and that, if ADM did not want to conclude those discussions, which was their privilege, to sell the shares to the institutions. I am also grateful to Davy's who acted on behalf of the Government and who were advisers to Greencore, for the success and excellent result last Friday morning from the sale of the shares and I appreciate the interest shown by ADM and others earlier. It is my fervent hope that the Greencore company goes from success to success.