Greencore given more time for Northern bid

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The Independent Online

Greencore persuaded Northern Foods to delay its shareholder meeting yesterday to give the Irish food producer more time to consider a counterbid to Ranjit Boparan's £342m takeover offer.

Northern Foods was due to recommend Mr Boparan's offer to investors at an extraordinary meeting yesterday, but Greencore approached the food producer behind Fox Biscuits and Goodfella's Pizzas on Friday, asking it to adjourn the egm. After talks with the Takeover Panel, Northern Foods agreed. The City was nonetheless sceptical yesterday that Greencore could produce a counterbid to torpedo the 73p a share offer that Mr Boparan's BH Acquisition tabled last month, breaking up a nil-premium merger agreed between Northern and Greencore in November. Northern Foods shares closed flat at 74.5p yesterday.

If a vote had been put to Northern Foods' shareholders, they would have almost certainly have voted in favour of the offer from Mr Boparam, the poultry processing magnate who owns the 2 Sisters Food Group. After founding the food manufacturer in 1993, he has grown its revenues to about £1bn. The Birmingham-based tycoon has to submit his offer in writing to Northern Foods' shareholders by 18 February.

Alongside a trading update at its own annual shareholders' meeting yesterday, Greencore said it was "considering its options" regarding the proposed merger and again cited the combined cost savings that Essenta could deliver. It said a "further announcement will be a made in due course".

However, City analysts doubt that Greencore will be able to come back with a bid to trump BH Acquisitions.

Alex Sloane, an analyst at Evolution Securities, said that if Greencore came back with a bid to compete with the 73p a share offer they would have to add either a "significant" cash component or potentially make an all-out cash offer.

He said: "Greencore only has so much ability to use debt to finance an offer. They would not want to burden the company with too much debt. Our own view is that there is only a 30 per cent likelihood that Greencore will come back with something that can compete with the Boparan offer. So we think that Boparan is the most likely winner."

Analysts at Credit Suisse have also said they believe Greencore "would struggle to finance an alternative [bid]".

In its offer document in January, BH Acquisitions said that its 73p a share offer represented a 61.3 per cent premium to Northern Foods' closing price on 16 November. Mr Boparan increased his shareholding in Northern Foods from 6.6 per cent to 11.4 per cent last week after buying 22.4 million shares at 73p.

At its AGM yesterday, Greencore described the performance of its convenience foods division as "good" in its first quarter, despite the adverse weather in the UK in December. Greencore said the division grew revenues at by 7.6 per cent to €209m over the three months to 24 December.