Blog: Dean BestIs poultry magnate Boparan hatching plan for Northern Foods?

Dean Best | 7 December 2010

A bit of fresh intrigue has developed around the planned merger between Ireland-based convenience food group Greencore and its UK peer Northern Foods.

The two companies last month announced plans to create Essenta Foods, a company with annual sales of GBP1.7bn (US$2.69bn) and serving the UK's largest supermarkets.

Greencore chief executive Patrick Coveney - soon-to-be CEO of Essenta - described the "not a merger of equals or the best of both, but a better than both in terms of the outcomes we are seeking".

Analysts cheered the deal, arguing the new company's more diverse customer base and greater scale would give it more leverage with the UK multiples.

Coveney outlined how Essenta would be based in Dublin, have a London listing and was set to be formally created by March.

In the meantime, Northern chief executive Stefan Barden quickly found himself a new job at foodservice group Brakes.

In all, the merger of Greencore and Northern looked like a deal that would go ahead with no serious hitches.

However, it has emerged over the weekend that Ranjit Boparan, the owner of UK poultry giant 2 Sisters Food Group and fish-and-chip-shop chain Harry Ramsden's has been building a stake in Northern since the announcement of the Greencore deal.

Through his Saerimner Ltd vehicle, Boparan has acquired a 6.6% stake in Northern, prompting some to suggest that the poultry magnate could make a counter bid for the UK firm.

Greencore and Northern shareholders vote on the merger plans in January so we are likely going to have to wait until then for Boparan's plans to emerge.

However, on paper, the Greencore-Northern merger looks a deal that is hard to beat.

For one, the two companies are key own-label suppliers to UK supermarkets and the merger is likely to create substantial synergies.

Could Boparan better the proposed tie-up?


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