The firm declined to comment after The Sunday Times claimed CD&R was in “detailed discussions” with Greencore after weeks of speculation about the bidder’s identity.
CD&R currently employs former Tesco boss Sir Terry Leahy, who is a senior advisor for the private equity house, which has offices in New York and London.
The firm has previous experience in owning food businesses, having bought US Foods, a supplier of fresh meat, ready-meals and frozen food to caterers, schools and restaurants in the US. It also owned food distribution firm Brakes between 2002 and 2007.
US private equity
Earlier this week, analysts ruled out 2 Sisters boss Ranjit Boparan as the mystery suitor saying that the most likely candidate was an overseas private equity firm.
Damien McNeela, analyst at Panmure Gordon, told Food Manufacture.co.uk: “It’s difficult to see any local food player gearing up to take Greencore out. That would lead to a private equity or possibly management offer. Greencore has a US presence, so it could be US private equity.”
Analysts have also said that the firm's share price was “far too low” at the time the bid was revealed which suggested “good tactics and possible opportunism by the potential bidder”.
Darren Shirley and Clive Black, analysts at Shore Capital said: “However, the present price would not be a satisfactory return for investors in Greencore to our minds, especially with the benefits from the Uniq acquisition still to come through.”
A share price of €1.00 would be the minimum that they would approve accepting, taking into account future anticipated cash flows, they added.
Awaiting confirmation
Black and Shirley said they are now awaiting confirmation of the approach from the Greencore board as well as an offer price.
At the time of publication, Greencore’s share price is €0.74, which values the firm at £245M.
CD&R declined to comment on the proposed bid which Greencore said, upon announcement on October 25, “may or may not lead to an offer for the company”.
Talks were at a preliminary stage and that further announcements would be “made when appropriate”, the firm added.
Meanwhile, as the search for confirmation on the mystery bidder is hotting up, Greencore rival Premier Foods was given a much-needed boost following news that its banks had deferred the company’s forthcoming financial covenants test previously due at the end of the year. The firm now has until March 31 as it seeks to renegotiate its debt arrangements with its lenders.