Greencore and Bakkavor, two prominent UK manufacturers, have recently been engaged in discussions over a potential £1.2bn ($1.57bn) takeover bid. After facing two rejections, the boards of both companies have reached an agreement in principle on Greencore’s latest offer for Bakkavor, signaling a positive step towards a potential merger.
In a statement released on April 2nd, Bakkavor’s board expressed their unanimous inclination to recommend the new offer to their shareholders if Greencore presented a firm intention to make a bid. The progress of the offer is contingent upon various conditions, including both companies conducting due diligence. Greencore had until April 11th to announce its decision on whether to proceed with a firm bid.
However, Bakkavor recently announced that the UK Panel on Takeovers and Mergers has granted an extension of the deadline to May 9th, allowing more time for discussions on the terms and conditions of the potential offer. This extension will also facilitate the completion of mutual confirmatory due diligence to the satisfaction of both Greencore and Bakkavor.
If the proposed deal goes through, Greencore would own 56% of the combined group, with Bakkavor shareholders holding the remaining stake. The acquisition is expected to create a leading UK convenience food business with a combined revenue of approximately £4bn, pending clearance from competition regulators.
Bakkavor, a UK-based company, specializes in producing ready meals and desserts for major retailers like Tesco. While the majority of its revenue comes from the UK market, Bakkavor also operates in the US and China. On the other hand, Greencore, based in Dublin, supplies a range of chilled, frozen, and ambient food products to major UK grocers such as Tesco, Sainsbury’s, and Asda, generating £1.81bn in revenue in its last financial year.
In 2018, Greencore made the strategic decision to exit the US market, selling its American business to an affiliate of Hearthside Food Solutions for $1.07bn after a decade of operation in the country.
The potential merger between Greencore and Bakkavor has the potential to create a powerhouse in the UK convenience food sector, combining their strengths and resources to enhance their market position and competitiveness. As discussions continue, both companies are focused on navigating the complexities of the deal and ensuring that all parties involved are satisfied with the terms and conditions.
Overall, the extended deadline for negotiations provides an opportunity for Greencore and Bakkavor to further explore the synergies and benefits of coming together, paving the way for a potentially transformative merger in the UK food industry.
