NORTHERN Foods appeared to open the door to a takeover bid from businessman Ranjit Boparan for the first time yesterday.
The company's board is backing a merger with Greencore to create a new company, Essenta, with revenues of around €2bn. That was announced last November, but just before Christmas Mr Boparan announced that his company, Boparan Holdings, was carrying out due diligence with a view to making a bid for Northern.
Since that announcement, Northern has repeatedly backed the Greencore offer and appeared to cast doubt on whether Mr Boparan would make a bid at all.
Yesterday, however, Northern's acting chief executive, Simon Herrick, appeared to strike a much more welcoming tone with the chicken tycoon, admitting that the price of any bid made by Boparan would dictate whether it would be acceptable or not.
"If an offer came in we'd have to consider it and price is going to be key. Our fiduciary duty as board members is to make sure we have considered employees and other stakeholders as well but price will obviously be a key issue," he said.
Mr Herrick described Mr Boparan as a "successful businessman who will make his own decision".
"He can't make a bid unless he is sure it can be funded . . . if he proceeds he will have weighed up all the assets and liabilities," Mr Herrick added.
Northern is reported to have written a letter of complaint to its former advisors, the investment bank Rothschild accusing them of providing preparatory information on the deal to Mr Boparan, who they are now advising.
Yesterday, however, Mr Herrick said Mr Boparan had "quality advisors who are well known".
'The Chicken King of Birmingham' has until next Friday to make an offer for Northern Foods or withdraw from the bidding process.
Analysts believe he is likely to make a bid but have warned a high cash offer would be necessary, possibly requiring him to secure funding in excess of £500m (€594m).
Shore Capital Stockbrokers say an offer in the region of 75 to 85p a share may be necessary. Northern closed yesterday at 61.5p.
A funding deficit in Northern's pension fund could prove a major stumbling block for the chicken tycoon as well. Greencore's offer includes a pension arrangement that has already been approved by the trustees, something that could prove much more costly for Mr Boparan to secure.
Yesterday, Mr Boparan attacked the Greencore offer, saying the deal was "completely wrong" for Northern.
"Both businesses have lost 70pc of their shareholder value," he told the 'Yorkshire Post'.
"Northern has been a declining business over the last decade and it's had a lack of leadership and direction," he added.
In its trading update for the third quarter released yesterday, Northern reported like-for-like sales growth of 2.3pc.