Greencore has pulled out of the race to buy UK rival Northern Foods, the Ireland-based convenience food maker announced this morning (9 March).

The two companies had been set to merge before UK poultry-to-fish supplier Boparan Holdings tabled a GBP342m (US$552.9m) takeover bid for Northern in January.

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The Boparan Holdings offer was backed by the Northern board, prompting Greencore to return to the drawing board and look for backing for a revised bid.

Greencore said today that it had been working on an improved offer but said a second bid “could not be concluded on terms which would deliver sufficiently strong returns to Greencore shareholders”.

“For some time, the board of Greencore has believed both in the considerable strategic merits of consolidation in the UK convenience food sector and in the strong logic of a combination between Greencore and Northern Foods,” Greencore said.

“Over the past few weeks, Greencore has been working with a partner in order to agree a simultaneous sale of certain of the Northern Foods branded businesses. This approach was intended to provide significant funding and allow Greencore to acquire only the parts of the Northern Foods business with the greatest synergy potential.

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“This relatively complex structure required a range of stakeholders to reach agreement. However, after substantial investigation, the board has determined that an improved offer could not be concluded on terms which would deliver sufficiently strong returns to Greencore shareholders.”

Boparan Holdings has received the backing of over a third of Northern investors and needs the approval of 75% of shareholders. The company, run by food tycoon Ranjit Boparan, has set a deadline of 16 March for those holding Northern shares to accept his offer.