Geest saw its shares rocket by 14 per cent, after two Icelandic brothers paid £40 million for a 10 per cent stake in the company.
The brothers Agúst and Lydur Gudmunsson run Icelandic ready meals giant Bakkavör, which is a supplier to Tesco, M&S, Waitrose, Sainsbury’s, Somerfield and Morrison in its own right.
The Gudmunssons are now the biggest shareholders in Geest, and have not ruled out a bid in the near future to increase their share yet further. Agúst Gudmunsson, who is chairman of Bakkavör, said the “long-term strategic investment” is in line with plans to invest further into the fresh convenience food market.
There has been surprise in the City, as building a stake in this manner is certainly not the most cost-effective method of seizing eventual control of a company. By paying this amount for a 10 per cent stake, analysts believe Bakkavör will have to pay more for any future shares. It is believed that a stake of around 15 per cent in Geest may be the Icelandic company’s aim.
Agúst Gudmunsson praised Geest’s management record of steady growth and said he had been attracted by high dividend payouts. There have been no demands as yet by either brother for a place on the Geest plc board or for any greater say in the strategic direction of the company.
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