Greencore deal at risk from rival

GREENCORE’s planned merger with Northern Foods was under threat last night, following a last minute play for the British group from a rival bidder.

News of the proposed merger came last November, when Greencore published its latest set of full-year results. It was envisaged that the two would merge, forming a company — Essenta Foods — which would have a Dublin headquarters and a London share listing and result in combined savings of about £40m (€46m) for the firms.

Last week, Northern Foods said that the merger with Greencore remained the most compelling option; but added that it would have to consider any rival bid from businessman, Ranjit Singh Boparan, who owns a 6.6% stake in Northern and who entered the fray before Christmas.

Yesterday, reports surfaced claiming that Mr Boparan — who also owns the Harry Ramsden’s chain of fish and chip shops — had crucially reached agreement (through his poultry processing and ready meals provider, 2 Sisters) with the trustees of Northern Foods’ pension scheme. Thus clearing the way for him to table a formal bid for the company — a move for which he had until yesterday to lodge.

According to rules set by the Takeover Panel in Britain, Mr Boparan had to make an offer for Northern or agree to walk away, but the panel extended its 5pm bid deadline until 7pm, which heightened speculation that an all-cash bid was being tabled.

It is understood that his agreement with the pension scheme trustees would see Mr Boparan pay more than £15m into the scheme every year, if he was successful with his takeover offer.

Northern Foods’ share price quickly surged 50% higher than where it was when the initial Greencore merger plans were announced, on the back of yesterday’s news.

London-based analysts were, earlier this week, suggesting that Mr Boparan would have to table a bid of between 75p and 80p per share in order to win approval from Northern’s shareholders; the alternative for whom is to sit tight and benefit from potential earnings uplifts from the formation of Essenta.

Greencore has already offered 0.4479 new shares for every Northern Foods share; while Mr Boparan is said to be hoping a cash offer will swing it for him. His offer could value Northern at about £356m. However, while the bid was thought to be at a good premium to Northern’s share price, it is understood to be below the 75p mark.