Boparan ruffles feathers at Northern Foods
Hugely successful businessman Ranjit Boparan could spoil the Northern Foods-Greencore party, writes Ben Laurence in a City Focus.
Entrepreneur: Ranjit Boparan's food group includes poultry and Harry Ramsden's fish and chip shops
There are just hours to go.
By this evening, Northern Foods - maker of all manner of ready meals for Marks & Spencer and the like, the company behind Fox's biscuits, Goodfella's pizzas and a clutch of other big brands - will know whether it is facing an unwanted takeover bid.
It is two months since Northern announced plans to merge with Irish food group, Greencore.
The deal was welcomed by shareholders and appeared to be coasting towards a genteel conclusion at the end of this month when the two groups' shareholders are due to vote on the deal.
But on December 17, a new suitor appeared.
The person aiming to block the Anglo-Irish tie-up was Ranjit Singh Boparan, a hugely-successful food industry entrepreneur who has built up a group with sales of £739m in the year to August 2009.
Outside the food industry, Boparan is scarcely well-known. He nudged his way into the headlines a year ago with the purchase of the Harry Ramsden's fish and chip shops. Last April he bought Five Star Fish for a reported £35m.
But the core of his business is built around poultry. Boparan's 2 Sisters Food Group supplies chicken to all of Britain's major supermarkets.
Following a series of takeovers, annual turnover is now claimed to be around £1bn.
Besides supplying own-label chickens, 2 Sisters sells under the Buxted Original brand and to KFC.
Boparan, 44, has proved himself a capable operator. The last available accounts for his master company Boparan Holdings showed pre-tax profits of more than £30m.
He and his wife, who own the company, received dividends of £12m.
Furthermore, Boparan has received praise from an unexpected quarter - Chris - now Lord - Haskins, who led Northern in its glory days in the Eighties and Nineties.
Haskins said this week: 'Look at what has happened to Northern Foods over the last few years and it's very sad.' He went on: 'Its reputation with customers has been pretty bad. Boparan is much sharper and he has good relationships with major retail customers.'
But a successful bid for Northern would take him well outside 2 Sisters' traditional area of expertise. Northern's operations embrace everything from ready-made sandwiches and salads to prepared meals such as chicken tikka and puddings.
Poultry supplier: Boparan's 2 Sisters firm sells chicken to all Britain's major supermarkets
Will he be able to spoil the Northern-Greencore party?
Northern is worth £309m. But the company also has £219m of debt. And crucially, it has a pension deficit standing at £140m when last measured.
The pension issue is key. Northern's pension scheme trustees have agreed that if the Greencore deal goes ahead, the hole in the fund could be plugged at a rate of £15m a year. But that agreement holds only if the merger is consummated. To buy Northern, Boparan would have to come up with his own plan to replenish the fund.
And that could require a commitment to pay significantly more than £15m a year. He opened talks with pension trustees only this week.
But Boparan has already given himself a leg-up in the struggle for Northern's future. He holds around 6.6% of the shares.
The Boparan camp will not say whether he has been an investor in Northern in the past.
Records show that he started building a stake in early August. According to people within both the Greencore and Northern camps, the two companies' chairmen - Ned Sullivan and Anthony Hobson respectively - had agreed in principle to a merger in July.
There is no suggestion Boparan knew of that agreement. Northern's share price showed no particular rise. No announcement was made until November 17 and only then did Northern's share price leap.
By that time, through a series of substantial share purchases, Boparan had built up a stake approaching 3% - the level at which he would have had to declared his holding.
Since the November 17 announcement, he has continued to buy. If he pulls out from the struggle to control Northern, he will be sitting on a tidy profit.
Over the late summer, before the November 17 Greencore announcement, Northern shares never traded above 48p. They are now above 60p.
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