Insider Media Limited

Irish food group Greencore has revealed it is bowing out of the takeover battle for Northern Foods leaving the path clear for Birmingham entrepreneur Ranjit Boparan.

Greencore said it had explored obtaining funding to acquire the parts of the Northern Foods branded business with what it described as the "greatest synergy potential". However, it has now decided not to proceed with this course of action.

Greencore said it had, as rumoured, been working with a partner but "after substantial investigation" had decided an improved offer for the Leeds-based company could not be concluded on terms which would deliver sufficiently strong returns to its shareholders.

The business added that the complex structure required for any deal needed a range of stakeholders to reach agreement.

Earlier this month, Boparan, who owns the Harry Ramsden’s fish and chip shop chain, said he has received the support of more than 34 per cent of Northern shareholders for his £342m offer for the company. Boparan said he had received acceptances from Northern shareholders holding 107.9 million shares.

He also revealed he had bought 30.9 million shares from Saerimner Limited, conditional on the status of Boparan's offer for the business, to go alongside the 22.4 million shares he already owns.

The chicken magnate's bid for Northern has been recommended by the food manufacturer's board at the expense of the previously recommended merger with Greencore.

Boparan hopes to combine Northern with his 2 Sisters Food Group and create a £2bn turnover business.

After Boparan's offer for Northern Foods was received, Northern's chairman Anthony Dobson said the offer was a "compelling opportunity" for shareholders to "realise a cash exit".

Northern is one of the biggest suppliers of own-label products in the UK, with revenue of £977m last year.

Greencore said the costs incurred in addressing its doomed merger will be treated as exceptional charges in the first half of its 2011 financial year.