Game, set, match Boparan?
Northern shareholders had until 1pm yesterday to accept Boparan’s £342m all-cash offer by his revised March 16, 1pm deadline for acceptances.
Accordingly, the businessman's firm BH Acquisitions told the stock exchange yesterday that the businessman had then received valid acceptances from shareholders for 211,003,504 Northern shares, 45.02% of the company's ordinary share capital.
Including the purchase of 13.61% of Northern’s shares on March 10, Boparan holds or has agreed to acquire 24.99% (117,118,761) of Northern’s shares - in addition to the acceptances from shareholders - making 70.01% in total.
Industrial logic ignored
Evolution Securities analyst Alex Sloane told FoodManufacture.co.uk that he expected Boparan to announce that he controlled 75% of Northern's shares "within the next day or so", which will allow him to declare his offer 'unconditional as to acceptances', and spell success for the takeover.
Sloane noted that Northern's share price was below 73p [72.62p] as we went to press, suggesting that the market was not expecting a rival bid, while on Monday Northern cancelled its pre-closure trading update for the year ending April 2 2011, which will not be necessary if Boparan takes the company private.
As for whether the 2 Sisters Food Group/Northern Foods tie-up was a positive move, Sloane said: "To us the industrial logic of Greencore/Northern was more compelling, given the category overlap in chilled ready meals and salads; there were potentially more cost synergies and revenue opportunities over time."
Take the money and run
However, Northern's shareholders were more attracted by a "cash exit today", said Sloane, rather than the diffuse promise of rewards tomorrow as a result of synergy delivery and value creation via Greencore's all-share offer; he added that the sector has a "poor track record" of delivering in this respect.
Credit Suisse analyst Charlie Mills told FoodManufacture.co.uk that last week’s acquisition alone – which saw Boparan command 48.25% of shares – meant "game, set and match" for Boparan, and said he was unsurprised by Greencore's "inevitable" announcement that it does not intend to rival the businessman’s all-cash bid.
Reflecting on the Irish firm's withdrawal from the Northern process, a Greencore spokesman said this morning: "It's fair to say that clearly we're disappointed we weren't able to complete."
Greencore still keen on consolidation
But despite missing out on Northern, Shore Capital analysts Clive Black and Darren Shirely noted on March 9 that Greencore’s ambition to have a “stronger platform in the UK prepared foods market is a sound one, and whilst Northern may have been the dream corporate ‘romance’ there are plenty more fish in the sea”.
Asked if Greencore still had an appetite for further acquisitions in light of these comments, the spokesman said: "We firmly believe that further consolidation is important for the sector, and with that in mind I am sure we will consider our options for the future."
