Greencore to fight rival bid

Marion Dakers
GREENCORE is expected to sweeten its merger deal with Northern Foods this week in an attempt to best Boparan’s £342m cash takeover offer.

Dublin-based Greencore is considering adding a cash sweetener on top of its all-share merger with Northern, according to people familiar with the companies.

Northern’s board has dropped its support for the Greencore deal and instead recommends that shareholders support Boparan’s £342m cash takeover offer, made late on Friday after the Takeover Panel extended its 5pm deadline.

Greencore will say in a statement to the market this morning that its board continues to support the Northern merger as a “compelling opportunity” and will make a further announcement in due course.

While Northern and Greencore investors are still due to vote on the merger on 31 January, it is likely that the shareholder meetings will be cancelled following Boparan’s intervention.

Meanwhile, Northern will send letters to its shareholders this week to stress the benefits of Boparan’s bid, which at 73p per share represents a 61.3 per cent premium on Northern’s closing price before the bid interest was revealed.

The bid also has a premium of 52 per cent to the value of Greencore’s all-share bid, which offered Northern Foods shareholders 0.4479 of a Greencore share for each Northern Foods share they owned and was worth 48.2p per share on Friday.

Analysts had said Boparan would need to offer a significant premium to improve on the cost synergies promised by Greencore.

Boparan struck a deal with Northern pension trustees to pay more than £15m a year to help shrink its £142m pensions deficit.

The pensions shortfall had been seen as a stumbling block for rival bidders after Greencore pledged to pay down the deficit.

Greencore’s team of bankers – Barclays Capital, Investec, IBI and Goodbody Stockbrokers – are examining funding options for a better merger plan.

The Irish food group hired an army of advisers to work on its merger with Northern, first announced in November, including Barclays Capital, Investec, Slaughter & May and public relations group Powerscourt.

Barclays Capital is acting as financial adviser, joint broker and joint sponsor, with Mark Todd and Jon Bathard-Smith heading the team.

Joint broker Investec has worked with Greencore for a number of years, with head of investment banking David Currie still heavily involved. Leading the Northern offer team is managing director Chris Baird, who joined from Dresdner Kleinwort in 2009.

IBI Corporate Finance and Goodbody Stockbrokers, both based in Ireland, are acting as joint sponsor and joint broker respectively.

Magic circle firm Slaughter & May is advising on the legal side, with partners John Panichola and Jonathan Marks leading a six-strong team.

Powerscourt has worked with Greencore since 2006, and counts BP, Aer Lingus and Independent News & Media among its clients.

The firm was set up by former Sunday Times business editor Rory Godson in 2004.

Rothschild, Goldman Sachs and PR agency Hudson Sandler are advising Boparan on its surprising rival bid for Northern Foods.