Tycoon’s pledge to create food giant after takeover

The West Midlands-based poultry magnate, who is paying £342m for the pizza and ready meals maker, said his offer is unconditional in all respects after the Irish Competition Authority “determined that the offer may be put into effect”.

That followed the Office of Fair Trading’s decision not to refer it to the Competition Commission.

Yesterday his bankers at Goldman Sachs began marketing a £695m senior note issue which he will use to repay a loan from them and pay off all of Northern’s debt.

Mr Boparan has nearly finished a whistlestop tour of Northern’s sites, which he is merging with 2 Sisters to create a £2bn European food giant.

He yesterday wrote to Northern’s staff and pledged to grow the combined group’s turnover to £3bn in four years, but did not provide any clarity on jobs or cost-cutting.

In his letter he said: “I am delighted that the acquisition is now absolutely certain and the two companies can start working together.

“Already I have visited nearly all Northern Foods locations and have had the opportunity to talk with a number of colleagues directly. The passion and dedication at every site has been simply brilliant and I’m looking forward to working with Northern Foods colleagues in the future.”

Mr Boparan said his offer of 73p per share will remain open for acceptances until further notice. He will pay shareholders within two weeks, he added.

Leeds-based Northern Foods, which makes Goodfella’s pizza and Fox’s biscuits, is expected to be de-listed on or near May 11.

That will end its 130-year stint as an independent company, which includes a 55-year stretch as a listed business.

Mr Boparan used a bridging loan from Goldman Sachs to pay off shareholders, but with the offer declared unconditional he is under pressure to repay this loan and secure the group’s long-term funding.

Goldman Sachs yesterday started marketing the £695m senior note issue, due in 2018. Ratings agency Moody’s rated the issue Ba3 – a non-investment grade speculative rating.

Standard & Poor’s assigned it a B+ rating with a stable outlook.

“The ratings are constrained by Boparan’s financial leverage, which we view as high,” said S&P credit analyst Hina Shoeb. “In our opinion, the group is exposed to integration risks from its sizable acquisition.”

However, S&P added “even under a conservative view of future growth prospects, Boparan should be able to service its highly leveraged debt structure”. S&P sees the combined group’s revenues hitting £2.1bn in the year to July, making underlying earnings of £180m.

Northern has 24 sites and more than 9,000 staff while 2 Sisters has 20 manufacturing sites and 6,000 staff.

Mr Boparan has so far declined to elaborate on how he plans to merge the companies, although he has started a “detailed business and operational review... to define its future strategic direction and identify cost savings”.

His offer document to shareholders said savings may stem from sharing resources between businesses and closing offices, and may result in job losses.

Trade unions yesterday called for urgent meetings with Mr Boparan to seek clarity on his plans.

Ian Wood, regional organiser at the Bakers, Food & Allied Workers Union, said the food tycoon’s Boparan Holdings company has not yet met with the union.

“We would like to meet him and find out what his plans for the future are – such as selling parts and cutting up the pieces,” said Mr Wood.

“There are major concerns. We need clarity, we need open transparency, we need to move forward.”

[email protected]