Bakkavor has agreed to a takeover offer by Irish company, Greencore, valued at £1.2bn.

The firms said the acquisition would create a "leading UK convenience food business" with a combined revenue of approximately £4bn.

The deal comprises a value of 200 pence per Bakkavor share, which represents a 32.5% on its closing share price on 13 March.

On a combination of the firms, Greencore shareholders would own 56% of the group, with Bakkavor shareholders owning 44%.

The boards at Greencore and Bakkavor said that the combination of the firm would enhance "capabilities across innovation, supply chain and operations" that would further benefit customers and consumers through "enhanced value across a complementary set of categories".

In accordance with takeover rules, Greencore has until 5pm on 11 April to make a firm intention to make an offer for Bakkavor or announce that it does not intend to do so.

Investment director at AJ Bell, Russ Mould, stated: "After a song and dance around valuation, it looks like Greencore has finally hit upon the magic number to gobble up Bakkavor. While still subject to a firm offer and shareholder vote, the tone of the latest update implies that Bakkavor is now on board to combine forces with the sandwich maker.

"There is strategic merit in parking the two companies together. They are big names in the UK food market, offering a range of products from ready meals and soups to pizzas and salads. Greencore wants a bigger slice of the pie and devouring Bakkavor would take the business to the next level.

"It would represent quite a turnaround for Greencore which was derailed by the pandemic. More people being called back to the office has been great news for its sandwich sales.
Greencore has sustained positive momentum by doing more work for existing clients and winning new ones. However, transformational acquisitions are always harder work than you think, so simply parking Greencore and Bakkavor together is not a guaranteed ticket to success."

---