Blog: Dean BestThe jury is out over what lies ahead for Northern Foods

Dean Best | 24 January 2011

Now that Boparan Holdings has shown its hand in the battle to buy Northern Foods, there are competing theories over what will happen next.

Will Greencore, the Irish food group with which Northern looked set to merge, return with an improved offer to tempt the UK group's shareholders?

Would a combination of Greencore and Northern generate higher long-term value than a coming together of Boparan Holdings and Northern?

Even if Greencore comes back with a better bid, should Northern accept it?

Having argued here that a merger with Greencore remains a better long-term bet for Northern and its shareholders, it was interesting to speak with one analyst in Dublin who took an opposing stance.

Joe Gill of stockbrokers Bloxham argued that a successful but higher bid for Northern from Greencore would load more debt onto the combined business. The all-cash offer from Boparan Holdings should be more appealing to Northern's investors, he argued.

Moreover, Gill said shareholders in both Greencore and Northern would do well to remember that, for all the Irish firm's insistence that a merger would create significant savings, there can be no certainty that the synergies would materialise.

Greencore and Northern shareholders are due to vote on the plans to merge next Monday. No doubt there will be plenty to chew over, and more twists and turns, in the days ahead.


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