Greencore's management are scratching their heads after losing the battle for Northern Foods despite putting an improved offer proposal to the company's pension trustees.

Greencore had worked up a superior offer to Ranjit Boparan's 73p per share bid but it was rejected by pension trustees on Monday because they did not want an immediate carve-up of the business, a source close to the company said.

Greencore did not intend to submit a revised offer, it added, after working on a bid that would have seen it sell off some of Northern's branded businesses at once. "The proposal would have given the trustees a significantly higher contribution up front but they just rejected it," said a source close to the company. "They didn't want the business broken up but it's widely accepted Boparan will eventually sell off elements. There are question marks as to whether they have been unduly influenced."

Boparan can now pursue his £342m takeover, but experts have already suggested he has overpaid given the deterioration of the Green Isle pizza business since Christmas.

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