Northern Foods up 24% on Greencore merger plan
Shares in Northern Foods closed up 24% after the maker of Fox's biscuits and Goodfella's pizzas revealed plans to merge with Irish rival Greencore.
The new combined company, to be named Essenta, will have annual sales of £1.7bn and be headquartered in Dublin.
The news gave the flagging British food manufacturer a fillip, returning its shares to a level not seen since May.
The merger terms will see shareholders in the two firms end up with roughly equal ownership of the new company.
The merger, which is expected to be completed by next spring, will see Northern Foods shareholders receive 0.4479 shares in the Irish chilled food and sandwich manufacturer in exchange for every share they own in the UK company.
"The proposed merger is a great opportunity to develop fully the potential of both companies," said Anthony Hobson, chairman of the Leeds-based Northern Foods in a statement published on the firm's website.
The companies hope to achieve cost savings of £40m per annum by 2014. Northern Foods currently employs about 9,000 people, while Greencore has 7,000 staff.
Greencore's chief executive, Patrick Coveney, will take over the running of the new company, while Northern Foods' Mr Hobson will retain his role as chairman.
It is unclear what the future of current Northern Foods chief executive Stefan Barden will be.