Greencore admits Northern defeat

CONVENIENCE food group Greencore has pulled out of the battle to gain control of Northern Foods.

In a statement yesterday the board said it will not be making a new offer for British company Northern Foods, makers of Goodfella’s pizzas and Fox’s Biscuits.

In November the Irish group, whose operations are in Britain, announced a merger deal with Northern on a non-cash 50/50 basis.

That plan foundered after entrepreneur Ranjit Boparan tabled a cash offer of over €400m for the business that the board recommended. He has received the support of more than 34% of Northern Food shareholders for his 73 pence a share offer.

He needs at least 75% of shareholders to accept and has set a deadline of March 16 for a response. Boparan’s intervention proved a turning point and the decision by the Greencore board has left chief executive, Patrick Coveney, bereft of a strategic plan to drive the company forward.

In its statement yesterday the board of the Irish registered company said it had looked at a number of options with an unidentified strategic partner that proved too complex to deliver on.

“This approach was intended to provide significant funding and allow Greencore to acquire only the parts of the Northern Foods business with the greatest synergy potential.

“This relatively complex structure required a range of stakeholders to reach agreement,” it said. It added that “after substantial investigation, the board has determined that an improved offer could not be concluded on terms which would deliver sufficiently strong returns to Greencore shareholders.”

NCB Stockbrokers, who along with other Irish analysts, felt a bid would be damaging to the interests of Greencore’s shareholders welcomed the decision not to take the process further.

It said, even allowing for the underlying attractions of a merger, Greencore had made the right decision.

“We believe Greencore has made the right choice to exit the bidding process, to focus on the challenge of protecting its margin against input inflation rather than risk its balance sheet in a Dutch auction.”

Shares in Greencore were up by 2.5% to €1.20 by early yesterday and had traded at over €1.40 in early December when Greencore looked to have a deal in the bag.