Greencore teams up with US firm for Northern bid
Published 22/02/2011 | 05:00
GREENCORE'S chances of landing a merger with Northern Foods remain remote, despite apparently teaming up with a US private equity firm in order to make a joint bid.
The Irish ready-meals company are said to have been joined by New York's Och Ziff Capital Management and is now looking at making a bid for Northern Foods that could top the offer already recommended by Northern's board from poultry tycoon Ranjit Boparan.
Mr Boparan's 73p-a-share bid, which valued Northern at £342m (€405m), appeared to have scuppered Greencore's plan to merge with Northern, which was announced last November.
Greencore has been casting around for a partner since Mr Boparan's offer, and has held talks with food companies and a number of private equity firms. However, even if a Greencore/Och Ziff bid comes in above Mr Boparan, market watchers still doubt it would be successful, or prudent.
"Greencore are looking for a partner to overbid for a company which no longer makes strategic sense for them to go after," said one. "If they make a bid that matches or exceeds Boparan's bid then there is a good chance the £40m worth of synergies they have highlighted will be wiped out. Then you have to ask, why are they doing this deal?
"At this stage, Greencore need to look hard at the rationale for upping their bid," he said.
Even if a bid with private equity happens, it may have difficulty being successful because Northern's pension trustees are believed to be against breaking up the company. Mr Boparan had to make a pledge not to break up Northern, whose brands include Goodfellas Pizza.
Other market players agreed, with one questioning whether Greencore was in danger of losing control of any deal they do with Och Ziff.
"These are serious people, make no mistake about it and if Och Ziff do go in with Greencore there is no doubt they would be coming in to win.
"But what happens once the deal is done? More than likely the private equity guys will want to break up the company more or less straightaway.
"[Greencore chairman] Patrick Coveney needs to be clear in what he wants from this partnership and needs to have any 'social' issues resolved before they takeover Northern," he added.
Greencore, which has until March 2 to make a new bid, closed down 1.4pc at €1.18.