Greencore says it still believes that a merger with Northern Foods to create Essenta Foods represents a 'compelling opportunity' for value creation for both companies.

The statement comes after Northern Foods said on Friday that it had 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. The company added that it had withdrawn its support for a merger with Greencore.

'However, the board recognises the importance attached by the Northern Foods board to the certainty of cash value in their decision to change their recommendation,' Greencore said in a statement this morning.

It added that the board of Greencore will now consider its options and as part of this process intends to seek the views of both Greencore and Northern Foods shareholders.

Boparan is a chicken entrepreneur who also owns the Harry Ramsden fish and chip shop chain.

Greencore shares closed down 5.2% at €1.14 in Dublin.