Northern Foods' suitor gets ultimatum over takeover

Food group Boparan Holdings late last month confirmed it is interested in buying the Leeds-based group, potentially throwing its merger with Irish rival Greencore into disarray.

The panel yesterday gave Boparan until 5pm on January 21 to either announce firm plans to make an offer for Northern, or walk away.

Northern and Greencore are at an advanced stage with merger plans which will create a 1.7bn food group called Essenta, with significant operations in Yorkshire.

The combined business would be based in Dublin and have an operational base in Yorkshire. It would employ more than 5,000 staff in Yorkshire.

Boparan, owned by West Midlands food tycoon Ranjit Boparan, last month asked Northern for access to confidential information as it weighs up making a cash offer, rumoured to be worth 300m.

Northern was forced to open its books to Boparan, which has 6.6 per cent of its shares.

Shareholders meet to vote on the all-share merger on January 31. Northern approached the Takeover Panel in a bid to clarify Boparan's intentions before the investor vote.

Mr Boparan made his millions through chicken processor Two Sisters Food Group, and has expanded his empire through acquisition in recent years, snapping up Yorkshire fish and chip group Harry Ramsden's a year ago, after buying the FishWorks restaurant and fishmonger chain out of administration a year earlier.

Yesterday Northern Foods said Boparan has not made a firm offer, and added it continues to believe the merger is the best deal. "The board continues to believe that the proposed merger with Greencore Group plc to form Essenta Foods offers substantial benefits for its shareholders, customers and employees and will create a convenience foods business with a strong platform for further growth and the potential to realise significant cost savings through synergies," it said.

Northern added notice of firm bid plans by Boparan must also include terms.

This would mean details on funding and satisfying the group's pension deficit.

The Takeover Panel said all parties have accepted its ruling. Shares in Northern shed two per cent to close at 61.5p.

Analysts at Shore Capital stockbrokers said a cash offer, with a premium, will be necessary to win shareholder approval.

"If Boparan does make an offer then we would suggest that it needs to be in cash and at a further significant premium," they said.

"Up to 75-80p may be necessary to avoid missing out on (the) Essenta potential.

"If the full synergies are achieved then the implied Northern Foods share price may be higher still."