Greencore will need to strike a deal swiftly after failing to secure Northern Foods or risk becoming a takeover target itself, City experts have warned.
M&A experts have cited Bakkavör and Uniq as potential targets. "Greencore publicly said to the market it needs to do something," said one City source. "It will need to move quickly and may be looking at Uniq, Bakkavör or other chilled food companies around, but none of them are easy."
Analysts said Greencore would be restricted by its debt levels and the willingness of banks to lend.
Although Premier maintains it is not looking to make further disposals, its Brookes Avana chilled foods business could be a better natural fit, they said.
"Bakkavör and Uniq both present pretty significant challenges," said Panmure Gordon analyst Damian McNeela. "With Brookes Avana, the hurdles aren't as high in terms of debt and pensions. I'm sure the others are being considered but this is the most attractive proposition."
Greencore would probably not rush into a deal after the Northern failure, McNeela said, but it was likely to make some sort of move by the end of the calendar year.
However, other City sources said Greencore chief executive Patrick Coveney would need to act far sooner. "It's got some big issues now," one M&A expert said. "It needed this deal as much as Northern and is pretty exposed.
"It's got to come up with some other deals because the market is expecting it to. The question is what other deals are out there and what is it prepared to pay."
Greencore is perplexed by offer rejection (12 March 2011)
Greencore concedes defeat in Northern takeover tussle (9 March 2011)