Greencore in fresh effort to mount Northern counter bid

CONVENIENCE food group Greencore has teamed up with a private equity firm in a fresh effort to mount a counter offer for Northern Foods, it has emerged.

The makers of Fox’s biscuits and Goodfella’s pizza agreed last month to back a bid worth 73 pence per share from businessman Ranjit Boparan, valuing the business at £342 million (€405m), and rejected a merger agreed in mid-November to join forces with Greencore.

The Irish group has since been in discussions with private equity groups over the past two weeks and has now teamed up with one unnamed partner about pursuing a potential deal, according to the Daily Telegraph’s online site.

Greencore held talks with Northern’s board earlier this week and was granted access to additional due diligence information ahead of a possible offer.

The extra due diligence is understood to centre on Northern’s trading performance over the last few weeks.

The Irish group “is understood not to have informed Northern Foods’ board of the private equity firm’s identity, as the buyout group wants to remain anonymous until it has decided whether to launch a rival bid,” according to the report.

News of the private equity involvement is likely to keep the shares above 73p in the short term, although some City sources suggested it would still be difficult for Greencore to mount a credible counter bid.

A private equity partner would give Greencore extra firepower to add a cash element to its previous all-share offer, the Telegraph said.

In mid-November Greencore announced a 50/50 merger with Northern foods to create a €2 billion food group, with a very strong presence in Britain’s branded and own-brand segment of the highly competitive retail sector.

Greencore’s boss, Patrick Coveney, was to become chief executive of the enlarged business.

Both boards of executives had recommended the offer to shareholders and EGMs were due to be held at the end of January to vote the merger through.

The Boparan all-cash offer brought the merger process to a dramatic halt and Greencore, in the meantime, had signalled it might consider a part-cash offer for the business.

Shares in the Irish-registered company were down 3 cent to €1.19 by mid-afternoon yesterday, a fall of 2.21%, despite the moves to mount a counter offer.