Greencore has seen its £1.1bn takeover bid for Bakkavor rejected by the fellow food-to-go giant, according to a statement it released to the London Stock Exchange.
Dublin-headquartered Greencore was proposing a merger of the two manufacturers to form a new company with a combined revenue of around £4bn. The enlarged group would have enhanced capabilities across a complementary set of categories, facilitating greater innovation and benefiting both customers and consumers, it said.
Greencore operates 16 production sites and 17 distribution centres across the UK supplying own label ranges including pre-packed sandwiches, baguettes, and wraps to all major supermarkets. Bakkavor’s grocery offering includes pizza, bread, ready meals, soups, salads, dips, desserts, and more, produced at 21 sites nationwide – its head office is in London and it also has factories in China and the US.
Greencore confirmed it had made two proposals to Bakkavor regarding a possible cash and share offer. The first proposal on 25 February 2025 was rejected by Bakkavor two days later.
A second approach was then made on 7 March with a revised offer of 85p per share in cash – which implies a total equity value of £1.14bn for Bakkavor – plus 0.523 of Greencore shares for each Bakkavor share. In addition, Bakkavor shareholders were to retain the right to receive the final dividend (4.8p per share) declared on 4 March.
On 10 March, the Bakkavor board unanimously rejected the Greencore offer saying that, together with its financial advisers, it had “carefully evaluated the latest proposal and concluded that it significantly undervalued the company and its future prospects”.
Greencore noted that the deal would result in its shareholders owning approximately 59.8% of the enlarged group, with Bakkavor shareholders taking the remaining 40.2%.
Last June, activist investor Oasis Management almost doubled its share in Greencore to 10% whilst voicing its frustration that the company had not paid out any dividends over the past four years. Dividends were reintroduced earlier this year, amidst Greencore’s most recent results for the year to 27 September 2024 reporting a 28% increase in operating profit to £84.3m. Group revenue was down 5.6% to £1.8bn, largely driven by the disposal of edible oils distribution business Trilby Trading to KTC Edibles in September 2023.
Greencore stated that it would continue to evaluate all strategic opportunities, including a merger deal with Bakkavor in the future.
Bakkavor’s latest results for the year to 28 December 2024 showed it had outperformed market expectations and grown UK volumes by 2.6%. It posted like-for-like revenues of £2.3bn for an 5.1% improvement on the previous term, while adjusted operating profits leapt by more than a fifth (20.5%) up to £113.6m as a result of an efficiency drive. “The momentum we have created and our clear strategy underpins our confidence in delivering further margin improvement in FY25 as we continue on our trajectory to our 6% target,” commented Bakkavor CEO Mike Edwards.
An ongoing pay dispute with workers at Bakkavor’s Spalding site in Lincolnshire was finally resolved last week, having escalated to strike action by Unite the Union members last September. The company confirmed its employees had accepted an improved pay offer including a 7.8% rise for its lowest paid staff and 6.4% to others.
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