UK food group Northern Foods has agreed to be taken over by businessman Ranjit Boparan in a deal valuing the business at £342m.
The maker of Goodfella's Pizza and Fox's biscuits is recommending that shareholders back a bid of 73p per share by Boparan. Northern Foods said it had withdrawn its support for a merger with Greencore.
"This attractive cash offer provides shareholders with an immediate premium to the value of Northern Foods within the proposed merger with Greencore," Northern Foods chairman Anthony Hobson said in a statement.
Boparan is a chicken entrepreneur who also owns the Harry Ramsden fish and chip shop chain.
The combined group will have annual sales of £2 billion, the two parties said in a statement As well as its branded products, Northern Foods supplies own label food to major British retailers, including Marks & Spencer and Tesco.
The shares of Northern Foods closed on Friday at 63p, valuing the business at just under £300m. Boparan's offer has been made at a premium of 52 percent to the value of Greencore's all-share bid, which offered Northern Foods shareholders 0.4479 Greencore share for each Northern Foods share they owned and was worth 48.2p per share at current share prices.
Analysts had said Boparan would need to offer a significant premium to secure the support of Northern Food's board, reflecting the fact the alternative of a highly complementary merger with Greencore had the potential for significant cost savings and growth opportunities.
Boparan said in a statement he had struck an agreement with Northern Foods pension trustees over funding for the pension scheme, which has a £142m deficit, conditional upon the takeover going through. No financial details were given.
