Greencore’s £1.2 billion acquisition of Bakkavor has taken a step forward with the boards of both companies agreeing the terms of a recommended acquisition.
The transaction, which Bakkavor is unanimously recommending to shareholders, would create a leading UK convenience food business with a combined revenue of £4 billion and approximately 30,500 employees.
The businesses believe that their combination will drive significant benefits for customers and colleagues and will make a significant continuing contribution to the UK economy.
Greencore shareholders are expected to own approximately 56 per cent of the combined group, while Bakkavor shareholders will own approximately 44 per cent.
Bakkavor, a major supplier of ready meals and desserts to UK supermarkets such as Tesco and Sainsbury’s, earned £2.29 billion in revenue last year, more than 80% in the UK. Greencore, based in Dublin with significant operations in Worksop, brought in £1.81 billion over the same period through its ready meals and food-to-go products.
Leslie Van de Walle, the 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. We are excited about the potential that a combination presents and the value it will deliver for both Greencore and Bakkavor shareholders.”
Simon Burke, chair of Bakkavor, said: “We are very happy with the progress made by Bakkavor delivering its strategy and significantly improved returns, both in the UK and abroad. We have clear plans for continued growth and are confident in the prospects for Bakkavor over the coming years.
“However, there has always been a clear strategic, commercial and financial rationale for a combination with Greencore. Having considered a combination previously, we believe that this Transaction now proposes terms that we consider are very attractive to Bakkavor’s shareholders.
“The Transaction offers shareholders a significant premium, with an attractive combination of cash on completion and the ability to participate in the future value creation anticipated from bringing the two businesses together. For this reason our board is unanimously recommending it to shareholders.”
Dalton Philips, chief executive officer of Greencore, said: “We are bringing together two experienced teams and our complementary portfolios will drive benefits for customers and consumers across the UK.
“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.
“We look forward to welcoming Bakkavor’s employees and creating an exciting, combined business for all stakeholders. Bakkavor is the ideal partner for Greencore and we look forward to delivering on the significant growth potential of the enlarged business.”