Irish food group Greencore Group (LON:GNC) was today pondering whether to bolster its offer to merge with Northern Foods (LON:NFDS) after being trumped on the deal late last week by Boporan Holdings. Greencore confirmed that it was now considering adding a cash element to the nil-premium merger offer that it originally made last November. Under the terms of that deal, Northern shareholders were in line to receive 0.4479 of one new Greencore share for every one Northern share held by them. The two sides had agreed to join forces as Essenta Foods, with strong brand positioning based on Northern’s Fox’s biscuits and Goodfellas pizza lines.
However, the Northern board switched allegiance late last Friday when Boporan, led by entrepreneur Ranjit Boporan, made a 73p per share cash offer for the group, valuing it at £340m. The Northern Foods share price responded this morning with a 16% rise to 73.25p. The move followed a two-hour ‘put up or shut up’ demand by the Takeover Panel for Boporan to make its offer. The price represents an 84.1% premium to the of 39.6p per Northern share implied in Greencore’s offer.
Responding to the Boporan offer, Anthony Hobson, the chairman of Northern Foods said: “This attractive cash offer provides shareholders with an immediate premium to the value of Northern Foods within Essenta Foods, the proposed merger with Greencore we announced in November 2010. Today's bid from Boparan is a compelling opportunity for our shareholders to realise a cash exit, and as such the board of Northern Foods will be unanimously recommending that Northern Foods shareholders accept Boparan's offer.”
Mr Boparan said: “The combined group will be one of Britain's major food suppliers with a turnover of more than £2bn. This will create significant opportunities which will benefit customers, consumers and employees. 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.”
In its response today, Greencore said it continued to believe that a combination with Northern Foods to create Essenta Foods represented “a compelling opportunity for value creation” for both Greencore and Northern Foods shareholders. However, it said it recognised the importance attached by the Northern Foods board to the certainty of cash value in…
A bidding war would certainly be nice.
I suspect though that Boparan's 73p/share bid will be a knockout one. I'd be surprised if Greencore came back with anything better, particularly as this one is an all cash bid. Who wants Greencore paper.
