FDBusiness.com

The Boards of Greencore and Bakkavor have agreed the terms of a recommended acquisition of Bakkavor in a deal that will create a leading UK convenience food manufacturing business with a combined revenue of about £4 billion and a workforce of approximately 30,500 employees. Greencore and Bakkavor have highly complementary product portfolios and a combination of their businesses creates a leading, homegrown UK manufacturing business with a diverse product offering and strong commercial relationships, operating in attractive segments across the UK convenience food landscape.

Following completion of the deal, it is expected that Greencore shareholders will own approximately 56% and Bakkavor shareholders approximately 44% of the combined group. Indeed, the combined group will benefit from economies of scale in relation to investment in existing infrastructure and systems, sustainability programmes and the key automation agenda. Greencore directors believe that the combined business can deliver annual run-rate pretax cost synergies of at least £80 million by the end of the third year following completion.

Commenting on this Announcement, Leslie Van de Walle, the Chair of Greencore, said: “Greencore is a great business that continues to deliver for customers, consumers and shareholders. The strength of our performance has provided the platform to pursue a transformative growth opportunity in the proposed acquisition of Bakkavor. 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.”

Dalton Philips, the Chief Executive Officer of Greencore, said: “The combination of Greencore and Bakkavor is an unrivalled opportunity to create a true UK national food champion with an even greater breadth of category range and deeper customer
relationships. 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.”

Simon Burke, the 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.”

Mike Edwards, the Chief Executive Officer of Bakkavor, said: “I am proud to have the honour to lead Bakkavor which is a fantastic business, with great people, producing high quality fresh prepared foods, that has strong strategic relationships with
some of the best retailers in the world. Combining with Greencore would bring together two businesses with the best people in the industry allowing us to take a ‘best of both approach’ to drive performance on every level. The combined business will create more opportunities for colleagues, allow us to do an even better job for customers, and be even more resilient. I am confident that the relentless focus that both businesses have on quality, service and innovation, and on striving to be a great place to work, will remain at the heart of the bigger business.”