Chicken king eyes up Northern Foods

By Rupert Steiner for the Daily Mail
Updated: 03:04 EDT, 23 December 2010

A former butcher who made a £270m fortune supplying poultry to Tesco and Waitrose has entered the race to buy Goodfella's pizza maker Northern Foods.

Poultry pays off: Ranjit Boparan built up £270m chicken fortune

Food tycoon Ranjit Boparan, who started his chicken processing empire Boparan Holdings in 1993, says he has made an approach to Northern amid speculation he is planning a £300m bid.

Northern confirmed he had been given access to its books but said Boparan - known as the 'chicken king of Birmingham' - had yet to reveal his intentions or indicate any potential offer price.

The entrepreneur, who also owns the Harry Ramsden's chain of fish shops, said he was 'at a preliminary stage in evaluating a possible cash offer for Northern Foods'.

News of Boparan's surprise move triggered a 2.5p jump in the Northern share price to 63p.

If he does make a formal offer his bid could gatecrash an agreed all-share merger between Northern and Greencore, the UK's biggest sandwich maker.

The pair had announced plans in November to join together but need approval from shareholders at a special meeting on 31 January.

The deal is due to create a new firm called Essenta with combined annual sales of £1.7bn. The merger would reap annual savings of around £40m.

Northern, which also owns the Fox's biscuits brand and is Britain's biggest maker of Christmas puddings, said it continues to believe 'the proposed merger offers substantial benefits for its shareholders'.

Boparan, though, has already built up a 6.6% stake in Northern.

The chicken tycoon, best known for his Buxted chickens brand, employs more than 5,000 people across 13 factories in Britain, Holland and America.

One potential hurdle to a bid is the £142m pension black hole Northern amassed since it started life as Northern Dairies in 1942.

A key part of the deal with Greencore was a commitment to deal with the deficit by way of extra annual payments of £15m.

Robbie Aitken, an analyst at RBS, warned: 'If an offer for Northern Foods were to employ a significant amount of debt, we doubt the Northern pension trustees would offer similar terms to those agreed under the proposed merger.'

Northern has struggled through the downturn and only last month warned the £5m relaunch of its pizza brand had failed to deliver, sending half-year profits tumbling.

Clive Black, an analyst at Shore Capital, said at the time that if both companies were firing on all cylinders, they would have stayed independent. 'I don't think this merger has come out of strength,' he said.