All eyes on Greencore as Boparan puts his cards on the table
Shore Capital head of equity research Dr Clive Black said: ”Our recommendation at this juncture and ahead of a new deadline for acceptances is that Northern Foods shareholders should wait and see what, if anything, Greencore proposes before accepting the Boparan offer.”
His comments came as the board of Northern Foods urged shareholders to reject Greencore’s overtures and instead plump for a 73p/share cash offer from chicken tycoon Ranjit Boparan.
Greencore mulling its options
Greencore, meanwhile, issued a statement this morning stressing that it continues to believe in the merits of a merger with Northern Foods and will “consider its options and as part of this process intends to seek the views of both Greencore and Northern Foods shareholders”.
The Boparan offer – tabled at the eleventh hour on Friday night - is just under Shore Capital’s suggested range of 75-80p per share but not so far below that it should turned down outright, added Black. “Unless of course there is a superior counter offer from Greencore or other potential suitors."
He added: “We do question if this is Boparan’s maximum offer capability for Northern Foods; is there is no more resource in its tank?”
A cash and shares proposal is considered to be the most likely next move from Greencore, which has some time to work out what to do next, pointed out Black. “I would neither expect or encourage Greencore to do anything immediately.”
Boparan: Strategic partnerships
Boparan said adding his chicken and fish empire to Northern Foods’ prepared foods, biscuits and frozen pizza business would make a £2bn+ turnover company that would “look to develop its strategic partnerships with its major food retailing clients”.
He added: “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.”
Clear strategic rationale?
While there are more obvious synergies arising from a tie-up with Greencore, Northern Foods insisted that getting into bed with Boparan had a “clear strategic rationale”.
It added: “The UK food industry has continued to consolidate and by participating in this consolidation, the Boparan Group and Northern Foods will continue to strengthen their competitive positions.
“The combined group will be able to build on the complementary strategies of both businesses from a position of significantly enhanced scale and efficiency and to take advantage of top-line growth opportunities through innovation and brand investment, whilst also delivering cost savings to enhance efficiency and competitiveness.”
The eleventh hour deal – brokered early Friday evening after Boparan was granted a two-hour extension to get his financial ducks in a row - values Northern Foods at £342m.
