Greencore seals €1.4bn deal for rival food-to-go manufacturer Bakkavor

Reuters

Dublin-based convenience food manufacturer Greencore has agreed to the terms of a recommended acquisition of UK fresh food provider Bakkavor Group, in a deal valued at £1.2 billion (€1.4 billion).

In April, the parties said they had reached an agreement in principle on the key financial terms of a possible cash and share offer by Greencore for Bakkavor.

The offer base consideration comprises 0.604 new Greencore shares and 85 pence in cash, valuing each Bakkavor share at 200 pence, with potential for further value if there is a sale of Bakkavor's US business, Greencore Group said on Thursday.

Bakkavor, which sells products such as soups, dips, salads, desserts, pizzas and breads, had been reshaping its businesses to cope with steep costs, subdued consumer demand and reduced volumes.

Greencore 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.

Bakkavor's retail customers include Tesco, M&S and Waitrose, while Greencore supplies all major UK supermarkets.

Greencore has received binding commitments from certain Bakkavor shareholders, who have committed to sell about 69.4 per cent of all Bakkavor shares, it said.

On completion of the deal, Greencore shareholders are expected to hold about 56 per cent and Bakkavor shareholders will own around 44 per cent of the combined entity.

Leslie Van de Walle, chair of Greencore, said: “We have long admired Bakkavor and we are pleased to announce a transaction that will create a true UK leader in convenience food.

“We intend to bring together our strong and complementary companies to deliver high-quality, innovative food to UK customers and consumers.”

Dalton Philips, chief executive of Greencore, added: “The combined group will be able to invest more in innovation and product development ensuring we can provide the consumer with greater food choices at more points in the day, bringing together Greencore’s ‘food for now’ expertise with Bakkavor’s ‘food for later’ portfolio.”