Shares in Northern Foods have soared 15% after its management backed a £342 million buy-out offer from the owner of the Harry Ramsden’s fish restaurants.
Ranjit Singh Boparan’s last-minute offer on Friday for the Goodfella’s Pizza and Fox’s biscuits manufacturer prompted its management to ditch a previous deal involving a merger with sandwich maker Greencore.
The Irish firm said it is considering its options and according to the Financial Times may return with a sweetened offer for Northern.
Northern’s shares rose to 72.5p, broadly in line with Mr Boparan’s offer price of 73p per share.
Mr Boparan wants to combine Northern with his other food businesses, including chicken producer 2 Sisters, to create a major player in the food industry with £2 billion of annual sales.
Previously, Northern’s management recommended that shareholders vote for the merger with Greencore. They announced in November that would see the creation of a new company Essenta Foods. But now they are backing Mr Boparan’s cash offer.
Mr Boparan’s cash offer is at a 61.3% premium to the closing share price of 45.3p per share on November 16 when the merger was announced and more than 10p in excess of Friday’s closing share price of 62.8p.
Northern Foods chairman Anthony Hobson described Mr Boparan’s offer, made after a two-hour extension to a deadline from the Takeover Panel, as “compelling”.
Greencore and Leeds-based Northern had agreed to create a new company with annual sales of £1.7 billion and cost savings of £40 million a year.
Shares in Greencore, which has around 7,000 staff and 17 manufacturing facilities in the UK, were down 5% following the announcement.