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Greencore-Northern merger 'still best deal'

GREENCORE yesterday reiterated its belief that its proposed merger with Northern Foods is still the best deal for Northern's shareholders, despite ongoing speculation that UK businessman Ranjit Boparan may bid for the company.

In its interim management statement for the first quarter of its financial year, the sandwich maker said it "continues to believe the recommended all share merger to form Essenta Foods. . . represents a compelling opportunity for value creation for both Greencore and Northern Foods shareholders, through the creation of a business with real scale in the industry and substantial synergies."

Analysts have speculated that any bid from Mr Boparan would have to be at a significant premium to Northern's current share price of 61.5p, possibly in the 75p to 80p range, while the pension deficit in Northern remains a key stumbling block.

Last night, however, City sources suggested that a bid even at the current share price could be significantly higher than the value of Greencore's offer.

It is thought a cash bid of around 60p a share, and similar or better terms on the pension, would be difficult for shareholders to turn down. Based on their current share price, Greencore's offer has a notional value of around 50p.

Despite that, Greencore remains favourite to complete a deal with Northern. Yesterday Northern's acting chief executive, Simon Herrick, said price would be the key issue if Mr Boparan bids.

Meanwhile, Greencore said it had a strong first three months to its financial year, shaking off any concerns that the poor weather in December may have hit its bottom line.

For the three months to December 24, the company said its convenience foods division had revenue of €208.7m, up 7.6pc over the same period last year. The Food to Go and Prepared Meals divisions performed particularly well, with a continuation of the "favourable underlying market trends" from last year.

The US business performed "in line with expectations".

The ingredients and property business was down year-on-year but it is much smaller since the sale of the malts business last year. The company added it expects to deliver strong growth this year, if the euro remains between 85 and 88p sterling.

Greencore closed down marginally at €1.32.

Irish Independent