Food-to-go firm Greencore agrees potential £1.2bn takeover of rival Bakkavor
The deal would create a combined food group with annual sales of about £4 billion.
Supermarket sandwich maker Greencore has agreed a possible £1.2 billion takeover deal for rival Bakkavor in a move set to create a food-to-go giant.
The pair have reached an agreement in principle on a potential cash-and-shares offer from Greencore for Bakkavor worth 200p a share.
This marks a 33% premium on Bakkavor’s closing share price on March 13.
The deal would create a combined food group with annual sales of about £4 billion, according to the firms.
Greencore is a prepared food specialist, which supplies all major UK supermarkets, as well as the likes of Marks & Spencer.
It has its headquarters in Dublin, with a UK head office in Worksop and 14 factories across the UK.
The group supplies nearly 750 million food-to-go items each year and employs about 13,300 staff.
London-headquartered Bakkavor employs around 17,200 staff across 41 sites in the UK, US and China.
It makes around 3,500 different freshly prepared food products, including meals, salads, desserts, dips, sauces, sandwiches, and pizza and bread products.
Under the terms of the potential deal, Greencore shareholders would own around 56% of the combined group and Bakkavor shareholders would own about 44%.
Bakkavor’s board has said it would be minded to unanimously back the deal, should Greencore make a firm offer.
Shares in Bakkavor rose 7%, while Greencore was 0.5% higher.
It comes after Bakkavor had rejected two previous approaches from Greencore.
The firms also said that as part of the deal, there would be a payment to Bakkavor shareholders should it sell off its US business within a year of any takeover by Greencore.
They added there would be “substantial synergies” from merging the two firms, which they are currently assessing and will outline “in due course”.
Eamon O’Hearn, national officer at the GMB trade union, said: “Companies ‘assessing synergies’ is often management speak for cost cutting.
“It is widely acknowledged by Government and the wider industry that the UK food and drink industry needs more capacity, not less.
“GMB is calling for a commitment to no factory closures and no job losses.”
