City Talk: 2 Sisters owner eyes up bid for Northern Foods
Following one bid last month from Greencore for Northern Foods, Boparan Holdings Ltd, owner of the 2 Sisters Food Group and run by Ranjit Boparan, is considering joining the bidding arena. However, Northern Foods' board has turned a blind eye to the bid overture and has continued recommending the Greencore merger to its shareholders.
Northern Foods' shareholders have until 31 January to vote on the merger. Northern Foods' share price rose by 7% as the stock market learned of the Boparan Holdings interest. Boparan said he was still at an early stage in pricing a bid and warned there was no certainty that he would make an offer. He has talked to the Northern Foods' management and has asked for the confidential files prepared for Greencore in order to complete his due diligence requirements ahead of a possible merger. The major problem he faces is Northern's £142m pension deficit, which has been dealt with in the complex merger structure prepared by Greencore.
Boparan already owns 6.6% of Northern Foods' shares through his company Saerimmer. The group also owns Harry Ramsden's and FishWorks and is one of Tesco's biggest chicken suppliers, as well as owning stakes in Goodfella's pizza and Fox's Biscuits.
Shareholders in Northern Foods could be attracted to Boparan if it launched a cash bid, which might be preferred against the nil-premium all-share merger with Greencore, which values the shares at only 48p. The market share price of Northern Foods hit 63p on news of the Boparan Holdings interest, valuing Northern at £295.3m.
Dublin-based Greencore saw its share price fall as dealers speculated that it was losing its grip on its merger plans for Northern Foods.
l As MTJ went to press, the Takeover Panel issued a 21 January 2011 deadline for Boparan to lodge a firm offer.
Iceland faces a bidding war
Iceland, the frozen food retailer, could face a bid after Middle East investors began talks to buy the business for up to £1.5bn.
A consortium of Arab investors, headed by Bahrain's Global Banking Corporation, is rumoured to be in talks with the administrators looking after the assets of the two failed Icelandic banks, Landsbanski and Glitnir, which held 78% of Iceland Foods.
The speculation of a possible bid from Bahrain could trigger an alternative bid from the Iceland founder and chief executive Malcolm Walker, who already owns 24% of the firm. Walker is understood to have made a £1bn bid to buy back Iceland earlier in 2010, but this was rejected.
Walker started Iceland in 1970 and built it into a 750-store supermarket chain. He was ousted as chairman in 2001, but was reinstated to the board in 2005, when a private consortium, headed up by Icelandic retail group Baugur, bought Iceland's parent company, the Big Food Group for £326m.
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