Dublin-based convenience food giant Greencore has announced plans to acquire rival Bakkavor for £1.2 billion. The acquisition will create a leading force in the fresh prepared food market with combined revenues of £4 billion.
Bakkavor is a major supplier of fresh prepared food, supplying Marks & Spencer’s gastropub ready meals, Tesco’s Pinch brand and Sainsbury’s healthy snacks range. The company operates in 41 locations, employs more than 17,000 people and has revenues of £2.3 billion, 85% of which comes from the UK. Bakkavor is also expanding its business in the US and China.
Financial terms and shareholder impact
Under the proposed transaction, Bakkavor shareholders will receive 85 pence in cash and 0.604 Greencore shares per share, valuing each Bakkavor share at 200 pence. This is a 32.5% premium to Bakkavor’s closing price of 151 pence on March 13.
The acquisition is subject to regulatory approval and due diligence. Both Greencore and Bakkavor’s boards have expressed their support for the deal, recommending shareholder acceptance. If the merger is finalised, Greencore shareholders will own 56% of the combined entity, while Bakkavor shareholders will hold 44%.
Next steps and leadership changes
As part of the agreement, Bakkavor directors Agust Gudmundsson and Lydur Gudmundsson will join the new group as non-executive directors.
With this acquisition, Greencore aims to strengthen its leadership in the fresh prepared food industry, expand its retail partnerships, and grow its global footprint.
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