Greencore Group Plc, a leading UK convenience food manufacturer, has agreed to acquire its competitor Bakkavor Group Plc in a cash and share deal valued at £1.2 billion, in a move set to create a £4bn food-to-go giant.
Under the proposed deal, Greencore shareholders would own approximately 56 per cent and Bakkavor shareholders would own approximately 44 per cent of the combined group.
Greencore, headquartered in Dublin, operates 14 factories across the UK, employing around 13,300 staff, and is recognized as the country's largest sandwich maker.
Bakkavor, based in London, employs approximately 18,000 staff across 42 sites worldwide, producing a variety of fresh prepared foods for major UK supermarkets, including Tesco, Marks & Spencer, Sainsbury's, and Waitrose.
It makes products including dips and hummus for Tesco and high-protein salads and “Gastropub” ready meals for Marks & Spencer.
Together, the companies said they would create a UK convenience food business with a combined revenue of £4bn, offering a diverse range of products.
Bakkavor was founded by the brothers Lýdur and Ágúst Gudmundsson known as “the Bakka brothers”. The brothers still sit on the company’s board as non-independent non-executive directors, and together own just over half of the company.
The pair is expected to join the board of the combined group as non-executive directors.
Greencore has been stalking Bakkavor Group to create a dominant food-to-go supplier since some time. Earlier in March, Bakkavor had turned down a £1.14bn takeover bid from the Irish rival.
Both companies mainly sell through supermarkets, stores as well as forecourts including Shell or BP petrol stations, so a merger is expected to give the combined group much more pricing power against some of the world’s toughest corporate customers.Please use the sharing tools found via the share button at the top or side of articles.
Greencore has stated that both companies’ boards had identified potential “substantial synergies” from the deal, including in their manufacturing, distribution, purchasing and administrative functions.
It also highlighted potential improvements to supply chains and greater “development opportunities” for employees.
Meanwhile, GMB Union has warned that the takeover must not result on job losses or factory closures and is calling for the commitment in this regard from the concerned parties.
Eamon O’Hearn, GMB National Officer, said, “This is a massive merger and could possibly pique the curiosity of the Competition and Market Authority’s new boss.
"Whether it does or now, 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.”
