Greencore, the UK’s largest sandwich manufacturer, has agreed a potential £1.2 billion deal to acquire rival Bakkavor, in a move that would create a £4 billion food-to-go powerhouse.
The two companies confirmed they have reached an agreement in principle for a cash-and-shares offer valuing Bakkavor at 200p per share. Under the proposed terms, Bakkavor shareholders would receive 85p in cash and 0.604 Greencore shares for each Bakkavor share, in addition to the final dividend of 4.8p a share.
The agreement follows two earlier bids from Greencore that Bakkavor rejected. However, Bakkavor’s board has now indicated it would be “minded to recommend” the new proposal unanimously, should Greencore make a formal offer.
Shares in Bakkavor rose by 5.7 per cent to 188p on the news, while Greencore shares edged down slightly to 178p.
The proposed deal remains subject to due diligence and regulatory approvals, but both parties see significant potential from combining operations — particularly in realising “substantial synergies” and economies of scale across their UK and international food-to-go operations.
Greencore, headquartered in Dublin and listed in London, operates 14 factories in the UK, producing nearly 750 million food-to-go items a year and employing around 13,300 people. Bakkavor, headquartered in London, is a major supplier of freshly prepared foods, employing 18,000 staff across 42 sites in the UK, US and China.
The merged group would see Greencore shareholders owning 56 per cent of the combined entity, with Bakkavor investors holding the remaining 44 per cent.
The deal also includes a contingent payment mechanism for Bakkavor shareholders, should the company’s US business be sold within a year of the transaction’s completion.
Analysts at Jefferies said the potential benefits of increased scale and improved operational efficiencies could make the deal “firmly accretive”.
If completed, the acquisition would reshape the UK’s chilled and convenience food landscape — creating a manufacturing giant well-positioned to meet rising consumer demand for fresh, ready-to-eat meals in both domestic and global markets.
