Greencore shares jump on Northern Foods deadline
Boparan must decide on rivalling €580m merger bid by January 21
Published 05/01/2011 | 05:00
SHARES in Greencore jumped yesterday after the company threatening its proposed €580m merger with the UK's Northern Foods was given two-and-a-half weeks to say whether or not it plans to make a rival bid for the British company.
In November, the Irish convenience foods group announced it would merge with Northern Foods in an all stock deal to create Essenta Foods. That deal hit a roadblock before Christmas, however, when Boparan Holdings, which is controlled by the English tycoon Ranjit Boparan, announced it was investigating a possible bid for Northern.
Yesterday, the UK's Panel on Takeovers and Mergers said it had given Boparan until 5pm on January 21 to announce "either a firm intention to make an offer for Northern Foods under Rule 2.5 of the [Takeover] Code or that it does not intend to make an offer for Northern Foods.
"No extension to this deadline will be granted, except with the consent of the panel executive," they added.
Under takeover rules, if Boparan decides not to bid for Northern, then it will be barred from launching a new bid for the company for six months.
That could be a moot point however, as Northern and Greencore shareholders are to vote on the merger on January 31. If Boparan does make an offer then it will be considered on the same day.
Both Greencore and Northern welcomed the Takeover Panel's announcement, which was expected by analysts.
In a statement, Greencore said its offer "represents a compelling opportunity for value creation for both Greencore and Northern Foods shareholders".
"The boards of Northern Foods and Greencore continue unanimously to recommend shareholders to vote in favour of the merger," it added.
Mr Boparan declined to comment but analysts said his company would have factored in a deadline of this nature.
Through his company, "2 Sisters Food Group", Mr Boparan is one of the biggest chicken suppliers to the likes of Tesco and Mark & Spencer in the UK.
The 44-year-old's bid is said to hinge on a commitment to fund Northern's pension, which has a deficit of £140m -- something Greencore have already committed to.
Greencore closed up 5.67pc in Dublin at €1.34.