Greencore move is trumped by Boparan cash
Merger plan with Northern Foods in turmoil as board backs blockbusting 73p-a-share offer takeovers
GREENCORE'S plans to merge with Northern Foods was in turmoil last night after businessman Ranjit Boparan submitted a blockbusting 73p-a-share all-cash offer for the English company and the Northern Foods' board threw their weight behind the new bid.
Mr Boparan's offer values Northern at some £342m (€401m) and far exceeds Greencore's all-paper offer which has a notional value of some 48p a share.
In a statement, the Northern Foods directors said they considered Mr Boparan's offer "fair and reasonable and unanimously recommend that Northern Foods shareholders accept the offer".
The directors went on to formally withdraw its recommendation to accept Greencore's offer, and urged shareholders to vote against a merger with Greencore at a shareholder meeting in 10 days' time.
Last November, Greencore and Northern reached agreement to merge, creating Essenta Foods. That announcement was welcomed by the market, but just before Christmas Mr Boparan, whose company 2 Sisters supplies chicken to major supermarkets in the UK as well as Greencore itself, revealed his company was contemplating a bid for Northern. Unsurprisingly, Mr Boparan was delighted to have had his offer accepted by Northern's board.
"This will create significant opportunities which will benefit customers, consumers and employees," he said.
"We look forward to working with the experienced Northern Foods team and combining our skills in product innovation and customer partnerships to create a larger business with enhanced prospects," he added.
Northern Foods chairman Anthony Hobson expressed similar sentiment, describing the new bid for Northern as a "compelling opportunity".
"This attractive cash offer provides shareholders with an immediate premium to the value of Northern Foods within Essenta Foods.
"Today's bid from Boparan is a compelling opportunity for our shareholders to realise a cash exit, and as such the board of Northern Foods will be unanimously recommending that Northern Foods Shareholders accept Boparan's offer," he said.
Greencore board members were considering their options last night before deciding what steps to take. The merger with Northern still represented a "compelling offer" for shareholders, they said.
The size of Mr Boparan's bid surprised industry watchers. Most analysts had been expecting him to bid at a small premium to Northern's current share price of 63p, and there had been suggestions that it could be as low as around 54p. Bloxham Stockbrokers' Joe Gill described the offer as "formidable".
The bid capped a dramatic day which saw Mr Boparan make his offer just before the London Takeover Panel's 7pm deadline. Hours earlier he finally secured a deal to fund Northern's pension deficit, long considered the main hurdle to taking over the company.
The Takeover Panel had already agreed an extension to its original 5pm cut off to allow the deal to be finalised.