City: Greencore could recruit partner in bid for Northern

Speaking to FoodManufacture.co.uk after Boparan revealed he had bought 22.4m Northern Foods shares in the market at the offer price, increasing his stake to 11.4%, Shore Capital analyst Dr Darren Shirley said Greencore had several options to consider.

"They could raise their own debts, do a rights issue, or go into partnership with someone who would take over the branded businesses​ [Fox's Biscuits and Goodfella's pizzas].

"If they go it alone they are unlikely to be able to fund a bid totally in cash; there would need to be a proportion in shares. But at this stage I wouldn't rule out a counterbid. They still have some time."​

Evolution Securities analyst Alex Sloane added: "Boparan is offering a cash exit today rather than a potential valuation upside over time. ​

“The big question is can Greencore raise the necessary financing to put together a competing bid? Any bid that it does come up with must have a significant cash element or be entirely in cash."​

A big ask​

 He added: “Let's say Greencore could raise £170m or so of debt to put towards an all cash bid, but it would still need to raise at least that much again through equity, and tapping its own shareholders for financing of that size would be a big ask."​

As of last Friday – when Boparan tabled his offer ​- Greencore has 28 days to get its ducks in a row​, but is unlikely to wait that long to make a move, one way or another, he predicted. “My sense is that Greencore will do something fairly soon or walk away.”​

Shore Capital head of equity research Dr Clive Black said: ”Our recommendation at this juncture and ahead of a new deadline for acceptances is that Northern Foods shareholders should wait and see what, if anything, Greencore proposes before accepting the Boparan offer.” ​

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