Boparan declared his offer ‘unconditional as to acceptances’ last Wednesday as he revealed that he now controls 79.52% of Northern’s shares – with his takeover set to go through subject to regulatory approval from the Office of Fair Trading (OFT).
However, a 2 Sisters spokesman confirmed late last week that the bid is still live as Boparan seeks to gain 90%, which will allow him to compulsorily purchase Northern’s remaining shares and take the firm private.
Concerned about the future
Unite the Union is co-ordinating the union response to the takeover (with the Bakers, Food and Allied Workers Union also involved) and national officer for food and drink Jennie Formby told FoodManufacture.co.uk.
“We’re very concerned about the future of Northern Foods, because it [Boparan’s offer document to shareholders] appears to give an open-ended commitment [on the future of jobs and sites] without any conditions attached, which is very worrying.
“Northern is also a very different business to 2 Sisters Food Group and what Ranjit Boparan has been involved with before…Our concern is that this could be a highly leveraged business with Boparan looking at ways to pay down debt.”
Boparan’s Northern takeover will be funded via a credit facility from Goldman Sachs (‘new debt financing’) in addition to an intra-group loan between the businessman’s companies Boparan Holdings and BH Acquisitions, with the facility also used to pay off Northern’s existing debts of around £243.8m.
Unions seek face-to-face meeting
Formby said union leaders were pressing Boparan to meet them “as soon as possible”, after the businessman said he was unable to meet them in early February due to work commitments.
On February 9, Boparan wrote in the offer document that BH Acquisitions would conduct a “detailed business and operational review of the Northern Foods group” following the declaration that his offer was declared unconditional in all respects, “in order to define its future strategic direction and identify cost savings”.
“Such savings may arise through the elimination of duplicated functions by sharing resources between businesses, business reorganisations and rationalisation of the combined group’s property portfolio although this will be determined as part of the review,” he wrote.
“Achieving any such cost savings could lead to office closures (or relocations) and restructuring of some parts of the combined group which could include some job losses.
“However, no decisions with regard to any possible job losses have been taken and any employee consultation requirements will be complied with.”
Subject to the business review, Boparan wrote that his plans for Northern did not involve any material change to employment conditions for Northern staff, while he had “no current intention” to change the location of Northern’s places of business or deploy its fixed assets.
Business review underway
Asked whether the business review was now underway, the 2 Sisters Food Group spokesman said: "I imagine that is something that will start now, given that he [Boparan] can now meet Northern management and employees, as well as simply trawling through the books.”
Asked about Boparan’s plans for Northern, Darren Shirley, analyst at Shore Capital, said: “We don’t really have much insight into Boparan. We don’t know how much stretch he’s put into the business to talk about cost savings or whatever.
“There’s a lack of visibility. He’s a private individual, so he’ll have discussed all his plans with his backers but in terms of analysts and the broader public, he doesn’t need to.
“To secure Northern Foods, particularly at the 73p/share level, he’s had to take on quite a bit of debt. He may be looking to realise some value from Fox’s Biscuits, which is trading robustly and has robust margins, and maybe Goodfellas Pizza, and to focus on the core business.”