THE BOARD of Greencore would be “acutely conscious” of “appropriately balancing risk and return” in any decision on a potential counter-bid for Northern Foods.
After yesterday’s extraordinary general meeting, chief executive Patrick Coveney told reporters that Greencore was still considering its options.
“The only thing that goes into our assessment here is what’s in the best interests of all of our stakeholders, particularly the shareholders,” he said.
The convenience food maker’s merger bid stalled in January when Northern Foods withdrew support for its all-share offer in favour of a last-minute cash bid from businessman Ranjit Boparan.
At the request of Greencore, Northern Foods adjourned its shareholder meetings yesterday, which were connected with the proposed merger between the two copmanies.
While Greencore had indicated to Northern Foods that it was evaluating its options, “there has been no revised offer from Greencore and there is no certainty that any such offer will be received”, it said yesterday.
When asked whether Greencore was considering the possibility of a rights issue to fund a higher counter-bid, Mr Coveney said he could not comment. Last week Greencore said it recognised the importance of a cash bid, sparking speculation that it might return with an offer containing a cash element.
Mr Coveney made it clear that any joint deal with Mr Boparan was unlikely.
“While I can’t be drawn on what is or isn’t on the table, I suspect it’s pretty unlikely that ourselves and Boparan would do something together.”
Greencore chairman Ned Sullivan said the question of the break fee of about £1.8 million, to which the company would be entitled if the merger with Northern Foods did not go ahead, “does not immediately apply” because of the adjournment of the UK company’s shareholder meetings yesterday.
“If the merger falls through, the break fee will be paid,” Mr Sullivan added.
A number of Greencore shareholders at yesterday’s meetings expressed doubt about the logic of acquiring Northern Foods. One disgruntled shareholder suggested that Greencore should be “engineering a takeover” of itself “so we can get some return on our investment”.
He added: “If you take over companies, you end up paying too much.” He also described the company’s attempts to acquire Northern Foods as “pathetic and embarrassing”.
The issue of executive remuneration was also raised by several shareholders.
“I’ve seen the value of my shareholding decimated, while directors’ salaries have gone sky high,” said one shareholder who invested when the company’s shares were first floated.
Mr Sullivan said that salary levels were performance-related and were set by a remuneration committee.
However another shareholder suggested that increases in directors’ remuneration should be related to increases in shareholders’ dividends.
“I think that would a very, very bad policy,” Mr Sullivan said.
