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Greencore Withdraws From Battle For Northern Foods

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Greencore Withdraws From Battle For Northern Foods

Greencore Withdraws From Battle For Northern Foods
March 09
10:47 2011

Greencore has announced that it does not intend to make a revised offer for Northern Foods. Greencore had initially proposed an all-share merger of equals between two of the leading convenience food groups in the UK, to create Essenta Foods, a £1.7b turnover business with strong positions in private label production along with significant brand strength in biscuits and frozen pizzas, respectively through the Fox’s and Goodfella’s brands. The merger was expected to yield cost synergies of £40m per annum within three years.

However, the proposed merger deal was subsequently trumped by a £342m cash offer for Northern Foods by Boparan Holdings, headed by chicken business entrepreneur Ranjit Singh Boparan.

Over the past few weeks Greencore has been working with a partner in order to agree a simultaneous sale of certain of the Northern Foods branded businesses. This approach was intended to provide significant funding and allow Greencore to acquire only the parts of the Northern Foods business with the greatest synergy potential.

This relatively complex structure required a range of stakeholders to reach agreement. However, after substantial investigation, the Greencore board has determined that an improved offer could not be concluded on terms which would deliver sufficiently strong returns to Greencore shareholders. Costs incurred, net of recoveries, will be treated as exceptional charges in the first half of Greencore’s 2011 Financial Year.

Meanwhile, Boparan has announced that it has acquired or agreed to acquire or received valid acceptances in respect of approximately 48.25% of the existing issued ordinary share capital of Northern Foods. The offer will remain open until 16th March 2011.

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