Northern deal off for Greencore as Boparan wins battle
GREENCORE has decided not to make a new bid for Northern Foods, effectively conceding the company to businessman Ranjit Boparan.
The Irish company had secured a partner, believed to be a private equity firm, and planned a rights issue to fund a higher offer for Northern but could not reach an agreement with the Northern Foods pension trustees.
It is believed the trustees' opposition to breaking up Northern proved the major stumbling block for Greencore.
Last November Greencore announced an all-paper deal to merge with Northern to create Essenta Foods. Those plans were thrown into turmoil after UK chicken magnate Ranjit Boparan made a 73p a share all-cash offer for Northern. That bid saw Northern's board withdraw their backing of Greencore's offer in favour of Mr Boparan.
By the close of trading yesterday he had increased his holding by 14pc to 48.25pc of the company. In a statement, Greencore said despite the "strong logic" in a potential deal between Northern and itself, it was not able to close the deal.
"For some time the board of Greencore has believed both in the considerable strategic merits of consolidation in the UK convenience food sector and in the strong logic of a combination between Greencore and Northern Foods.
"Over the past few weeks Greencore has been working with a partner in order to agree a simultaneous sale of certain of the Northern Foods branded businesses.
"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, but 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," it said.
The company will treat costs related to the failed deal as exceptional charges in the first half of the 2011 financial year.
Sources close to Greencore said the company would now assess its options and planned to move forward in a "disciplined" manner.