Northern Foods and Greencore agree to merger

The deal, which is structured as a merger of equals, will see the creation of a combined business to be named Essenta Foods which will be headquartered in Dublin and have a UK operational centre in Yorkshire, the companies said in a statement today.

Shareholders of Leeds-based Northern Foods will receive 0.4479 of a new Greencore share for each Northern Foods share they hold. Greencore and Northern Foods shareholders will hold about 50 per cent of the combined group.

The companies are targeting cost savings of about 40m per annum to be realised within three years from the merger, which they expect will complete during the second quarter of 2011.

"The proposed merger is a great opportunity to develop fully the potential of both companies," Northern Foods chairman Anthony Hobson said.

Northern Foods makes own-label products for retailers as diverse as premium food seller Marks & Spencer and discounter Aldi. Its brands include Goodfella's Pizza and Fox's biscuits. Greencore is one of Britain's biggest sandwich and ready- meals-makers.

Greencore employs more than 3,000 people across four main sites in Yorkshire. It operates Greencore Cakes and Desserts in Hull; Greencore Grocery in Selby, Sheffield-based Greencore Prepared Foods and Greencore Frozen Foods, which has operations in West Yorkshire.

Patrick Coveney, chief executive of Greencore, will become chief executive of the merged group, and Simon Herrick, chief financial officer of Northern Foods, will take up the same position at Essenta Foods.

It is not yet known what Northern Foods' chief executive Stefan Barden will do.

Anthony Hobson, chairman of Northern Foods, will become chairman of Essenta Foods upon completion of the merger.