Race for Northern Foods could go to wire
Rumours surfaced on February 22 that convenience food group Greencore was seeking a private equity or trade partner to fund a second bid for its peer Northern to trump businessman Ranjit Boparan’s stellar £342m all-cash offer, tabled in late January.
2 Sisters Food Group owner Boparan tabled his bid via subsidiary firm BH Acquisitions, and since Northern’s shareholders had until 1pm today to accept or decline it - after an offer document was posted out to them on February 9 - Greencore was under pressure to make a rival play for the firm.
On paper Greencore has until March 27 to make a new bid for Northern, but if BH Acquisitions now has an unconditional controlling stake in Northern (with 75% in favour his bid), which it must reveal within the next 24 hours, this deadline will cease to apply.
Greencore still in fight
Alex Sloane, analyst, Evolution Securities told FoodManufacture.co.uk that Boparan is striving to gain 75% acceptance as soon as possible, one reason why the businessman bought 22.4m Northern shares at 73p on January 25, something he could not do once shares rose above the price of his later offer.
However, Sloane said he doubted whether BH Acquisitions would acquire 75% acceptance, despite Boparan himself owning 11.4% of Northern's shares:"Today was always something of an arbitrary deadline in my mind. I think Boparan was trying to draw Greencore out, but they have 46 days after his offer document was posted to [Northern] shareholders to respond."
Sloane added that 25%+ acceptance would at least provide Boparan with a blocking stake, but that given the still live possibility of a counterbid from Greencore, said he thought many Northern shareholders may have hedged their bets, and not rushed to accept the businessman's offer.
Share price ticked down
Asked about the likelihood of Greencore tabling a second bid before today's acceptance deadline, Robbie Aitken, analyst, RBS said this morning: “It looks a lot less likely now, although I’m not at pains to point out the probability or not [of any counter-bid], the possibility still remains.
“Northern’s share price [73.6p as we went to press] has ticked down a penny or so in the last couple of days [which suggests the market has doubts about any potential counter-offer], while a lot also depends on the structure Greencore applies to take any bid forward.”
Aitken added that at the very least Greencore would need to trump Boparan’s 73p/share (£342m) all-cash offer with any cash and scrip (where shares are offered in lieu of cash) or all-cash bid.
Commenting on rumours that the Irish firm was tapping-up private equity and trade partners with a view to raising extra capital for a second bid, he said: “There’s been lots of media speculation about possible tie-ups with private equity players. Who knows? All you can say is that Greencore is keen to access a bigger business.”
Possible branded spin-off
Darren Shirley, analyst, Shore Capital, told FoodManufacture.co.uk on February 22 that he wouldn't rule out a counter-bid from Greencore "involving either a private equity firm or another large industry player".
“There’s certainly merit in the tie-up in own label between Greencore and Northern, and any spin-off of the latter’s branded business (Goodfella’s and Fox’s Biscuits) [in the event of a trade/private equity tie-up] wouldn’t necessarily be a problem,” he said.
