Greencore, a leading convenience food business, has taken a significant step towards acquiring fellow industry player Bakkavor. Both companies have now given their recommendations for the takeover, bringing the deal closer to completion.
In an announcement made on 15 May, Greencore revealed that it has secured irrevocable undertakings from Bakkavor shareholders representing 69.4% of the company’s shares, agreeing to accept the offer. This move paves the way for Greencore to proceed with the acquisition, which is valued at around £1.2bn ($1.6bn) and is set to create a combined private-label business with an estimated revenue of approximately £4bn.
The approval from Bakkavor shareholders marks a significant milestone in the acquisition process. Shareholders of Greencore will now have the opportunity to vote on the deal, with the voting expected to take place around 4 July. Greencore’s directors have already given their approval for the transaction, expressing enthusiasm for the potential of the combined business.
Greencore CEO Dalton Philips emphasized the strategic significance of the merger, stating that the collaboration between Greencore and Bakkavor will establish a prominent UK food champion with an expanded product range and stronger customer relationships. The company is optimistic about the growth prospects of the enhanced business and looks forward to integrating Bakkavor’s employees into the new entity.
Meanwhile, Bakkavor shareholders are scheduled to convene around 7 July to decide on accepting the proposed deal. The completion of the acquisition is anticipated in early 2026, subject to approval from the UK’s Competition and Markets Authority.
As part of the acquisition terms, Bakkavor shareholders will receive 0.604 new Greencore shares at 85 pence each, along with a contingent value right. This provision is linked to the potential sale of Bakkavor’s US operations, which Greencore may pursue if deemed beneficial for all stakeholders.
Mike Edwards, the CEO of Bakkavor, highlighted the potential synergies between the two companies, emphasizing the opportunity to leverage their combined expertise and capabilities for enhanced performance and resilience.
In a separate development, Bakkavor announced the planned sale of its China operations to Lihe Xing (Qingdao) Food Technology Co. for approximately £50m. The company’s trading update revealed that the US operation contributed £59.2m in revenue, while the UK segment saw a 2.7% sales increase to £471m.
Greencore reported a 6.5% revenue growth to £922m in the first half of the fiscal year, with adjusted operating profit rising significantly. The company raised its full-year profit outlook, surpassing pre-pandemic levels of profitability.
The combination of Greencore and Bakkavor is expected to generate annual cost synergies of at least £80m by the third year post-acquisition. The transaction has been deemed highly compelling by both boards, with Bakkavor’s shareholders set to benefit from a significant premium and the potential for future value creation.
Simon Burke, the Chair of Bakkavor, expressed confidence in the terms of the transaction, citing the attractive benefits it offers to shareholders. The unanimous recommendation from Bakkavor’s board underscores the potential value and growth opportunities associated with the merger.
The acquisition of Bakkavor by Greencore signifies a major consolidation in the convenience food sector, with both companies poised to capitalize on their combined strengths and market presence. As the deal moves closer to completion, stakeholders are optimistic about the growth prospects and value creation that the merger is expected to unlock.
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