Northern Foods, which is currently in the middle of merging with Ireland's Greencore, has left the door open for a rival bid from chicken entrepreneur Ranjit Boparan. However analysts said Northern's pension deficit could prove a stumbling block.
Boparan, who also owns the Harry Ramsden fish and chip shop business, has until 21 January to decide whether to try and break up the Greencore deal. Under the current terms, the merged group would be worth around ?555m, but alongside a trading update today Northern Foods said it would have to consider any offer Boparan made, with price being a key issue.
However Panmure Gordon's Damian McNeela played down the prospect of a rival bid for Northern, which supplies own label chilled products to supermarkets as well as making Fox's Biscuits and Goodfella's Pizzas. He said:
Providing that Boparan Holdings can raise the required capital to purchase Northern Foods, we see overcoming the issues surrounding the current pension deficit of �107.8m as being the major hurdle, and regard a successful takeover by Boparan Holdings as unlikely.
JP Morgan Cazenove was not convinced either:
At this stage, the intentions of Boparan remain unclear. In our view, it could be interested in Northern's chilled business and look for interested parties for its frozen and biscuits businesses... It could be interested in making a counter-bid. However we believe that it is unlikely to be able to match the �40m cost synergies targeted in the proposed merger of Northern and Greencore and, moreover, it would have to acquire the approval of Northern's pension trustees. According to Northern's finance director Simon Herrick, Boparan is not talking directly with the pension trustees.
Northern's shares dipped 0.5p to 61.5p, still a 20% premium to Greencore, suggesting the market has not entirely ruled out a move by Boparan. However if a rival bid does not materialise, analysts believe the shares could come under pressure.
Overall the market slipped lower, as an unexpected rise in US weekly benefit claims outweighed the more positive news of successful bond auctions from Spain and Italy. By the close the FTSE 100 had fallen 26.84 points to 6023.88. Joshua Raymond, market strategist at City Index, said:
The 6050 [level] continues to put a ceiling on the FTSE's charge higher and this has stayed true for today's session. Tonight we see Intel, the tech bellwether, announce their fourth quarter earnings and should they outperform expectations, this could certainly give the markets a strong start tomorrow. However traders may hold fire until Friday lunchtime when JP Morgan report their earnings. Should these two firms deliver a strong set of results, it could give the market enough buying power to lift the FTSE 100 beyond 6050 and towards two and a half year highs of 6090.
Retailers dominated the day's corporate news, with Tesco falling 18.15p to 405.55p and Dixons Retail down 2.38p to 21.35p after disappointing updates. But Home Retail, 21.1p higher at 227.1p, and Game Group, which gained 9.75p to 72p, both performed better than expected over the key Christmas period.
British American Tobacco lost 86p to �23.25 following a negative note from Bank of America/Merrill Lynch, but IMI jumped 38.5p to 949p after the same bank moved its recommendation on the manufacturing group from neutral to buy.
Royal Dutch Shell A shares slipped 9.5p to 2130.5p on talk its earnings may disappoint, while BP was down 0.2p to 503.7p after early bid talk faded. There was also vague takeover speculation around Marks & Spencer, up 7.4p at 380p.
Elsewhere the equipment rental sector was the unlikely stage for a bid battle. UK group Ashtead has teamed up with Belgium's TVH Services to launch a 115p a share, �183m cash offer for Lavendon, which hires out aerial work platforms. This topped a previous TVH bid of 111p made in December. Under the terms of the offer, Ashtead would acquire Lavendon's UK business while TVH took the European and Middle Eastern operations. The two said they would not raise their offer unless due diligence showed Lavendon was doing better than current market expectations.
Lavendon immediately rejected the bid, saying it was opportunistic and undervalued its business. In the market Lavendon lost 4p to 111.25p while Ashtead dropped 3.7p to 166.3p.
Source: http://www.guardian.co.uk/business/marketforceslive/2011/jan/13/rival-bid-northern-foods
Cobham Enjoy England TwiTrips Marcus Bent La Liga Stan Collymore Classical music
No comments:
Post a Comment