Business Weekly - Cambridge, UK

Formed by a Management Buy Out from Dalgety plc in 1996, Greenvale offers a fully-integrated service, from seed potatoes and agronomy services to grading, washing and packing the final harvest.

In addition, Greenvale works with its growers to help them plan ahead and find a market, even before the crop is grown.

One example of the innovation and additional value offered to its growers and customers is the traceability scheme Greenvale introduced for organic potatoes last year.

“All our major customers require full traceability,” explained finance director, Andy Behagg, “but this scheme takes it one step further, right to the consumer.

“Each pack has its own five digit code, which the consumer can log into a web site – www.potatoinfo.org – to find information on the grower and source of the product.”

In 2002, the board of Greenvale realised that it had an opportunity to buy out the original institutional investors, including 3i.

“Potato-growing is a highly volatile commodity business,” said Andy Behagg. “By allowing the investors to realise their value in the company, the management team was able to acquire a majority equity stake in the business, demonstrating its commitment to further develop Greenvale’s long-term future.”

Rarely a straightforward event, the 2002 MBO was particularly complex because Greenvale had acquired a further two companies since the original deal, partly funded by a paper offer of redeemable preference shares.

In addition to the equity shareholders, employees also had share options, and each group of shareholders had to be catered for under the new arrangements.

“Having spent considerable time finding a banker, solicitor and accountants for the 1996 MBO, we decided to use the same team this time round because we knew that we could all work well together,” continued Behagg.

“These complicated deals take time to get right, and it was important that we all pulled in the same direction.”

The banking and corporate finance expertise of Tony Peel, director for Lloyds TSB Corporate, Thames Valley and South, was particularly valued by Greenvale’s board.

“This was a complex deal, which needed to be accepted by a wide range of interested parties,” added Behagg, “and Tony and his colleague, Mark Bolshaw, from Lloyds TSB Acquisition Finance, structured the deal in such a way that the City regulator was happy to allow it through.”

The final deal was worth approximately £22 million, with all the acquisition finance either internally generated or provided by Lloyds TSB Corporate.

“We have great respect for the abilities, determination and integrity of the Greenvale management team,” said Tony Peel.

“I have always been impressed by the way in which they manage to involve everyone - customers, suppliers, advisers and staff as part of the same team.

“There is an underlying focus and positiveness, which made it easy for us to work with them to help this latest deal succeed.”

Behagg concluded: “Our six-year relationship meant that there was a huge degree of trust between us. The timescales set by the City takeover panel can lead to exposed risk, but Lloyds TSB Corporate has stood with us throughout the process. We couldn’t have done this deal without that backing.”