Greencore, the UK’s largest sandwich producer, has agreed a possible £1.2 billion deal to accumulate rival Bakkavor, in a transfer that will create a £4 billion food-to-go powerhouse.
The 2 corporations confirmed they’ve reached an settlement in precept for a cash-and-shares provide valuing Bakkavor at 200p per share. Below the proposed phrases, Bakkavor shareholders would obtain 85p in money and 0.604 Greencore shares for every Bakkavor share, along with the ultimate dividend of 4.8p a share.
The settlement follows two earlier bids from Greencore that Bakkavor rejected. Nevertheless, Bakkavor’s board has now indicated it might be “minded to recommend” the brand new proposal unanimously, ought to Greencore make a proper provide.
Shares in Bakkavor rose by 5.7 per cent to 188p on the information, whereas Greencore shares edged down barely to 178p.
The proposed deal stays topic to due diligence and regulatory approvals, however each events see important potential from combining operations — notably in realising “substantial synergies” and economies of scale throughout their UK and worldwide food-to-go operations.
Greencore, headquartered in Dublin and listed in London, operates 14 factories within the UK, producing almost 750 million food-to-go objects a 12 months and using round 13,300 folks. Bakkavor, headquartered in London, is a serious provider of freshly ready meals, using 18,000 employees throughout 42 websites within the UK, US and China.
The merged group would see Greencore shareholders proudly owning 56 per cent of the mixed entity, with Bakkavor traders holding the remaining 44 per cent.
The deal additionally features a contingent fee mechanism for Bakkavor shareholders, ought to the corporate’s US enterprise be bought inside a 12 months of the transaction’s completion.
Analysts at Jefferies mentioned the potential advantages of elevated scale and improved operational efficiencies might make the deal “firmly accretive”.
If accomplished, the acquisition would reshape the UK’s chilled and comfort meals panorama — creating a producing big well-positioned to fulfill rising shopper demand for recent, ready-to-eat meals in each home and world markets.
