NORTHERN Foods, the dairy and food processing group, which is demerging its milk business into a separate company to be called Express Dairies, is acquiring Carlisle-based chilled and frozen food producer Cavaghan & Gray Group in an agreed cash deal worth #79.2m, or 115p per share.
Cavaghan shares rose 31p to 112.5p yesterday as the market warmed to the announcement. Under the terms of the offer Cavaghan shareholders will also be entitled to a second interim dividend of 3p per share.
Cavaghan, which supplies major supermarket groups including Marks & Spencer, suffered in its last financial year from the impact of BSE which depressed sales of minced and beef
products.
While this was expected to continue to have an adverse impact, it successfully developed a significant number of fish and vegetable-based products in response to this trend in
consumer demand.
In the half-year to September 30, 1997 profits were up from #1.01m to #1.59m before tax. The company said that group trading is expected to show improvements over last year in the final quarter.
Last month the company said it had agreed in principle to purchase the business of fish processor John Richards & Sons of Aberdeen for #1.3m cash.
Northern has received irrevocable undertakings, which are not subject to withdrawal in the event of a higher offer, from Cavaghan directors and other shareholders in respect of 23.3% of Cavaghan's issued share capital.
Northern Foods chairman Christopher Haskins said: ''The acquisition is in line with our established strategy of developing our Prepared Foods operation through both organic growth and selected acquisitions of complementary businesses.''
Northern brands include Fox's biscuits, Ski Yogurt, Pork Farms and Bowyers savoury pastry.
Michael Abrahams, chairman of Cavaghan & Gray, said the board will unanimously recommend the offer, ''which we believe fairly recognises the value which we have worked hard to build after the significant detrimental impact of BSE on our business.''
n TGI Friday's yesterday announced it was teaming up with catering company Compass Group to open restaurants in airports across the world.
Compass will be setting up chains on the Continent, the Asian Pacific, Canada and South Africa after signing a five-year development agreement with the US group.
The UK company already markets a number of brands under licence including Burger King and Pizza Hut.
Roger Matthews, managing director of Compass, said: ''We are extremely pleased to add these high quality and very popular brands to our existing portfolio.
''A key part of our strategy for business growth is the ability to offer our customers the choice of market-leading brands.
''We expect that the presence of the Friday's brands will not only prove successful in our existing sites, but will help in gaining new international business.''
Compass subsidiary, Select Service Partner, which deals in travel, shopping and leisure, will be handling the development of the franchise and it has operations in 45 airports in 14 countries.
TGI Friday's has 470 restaurants in 43 countries.
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