Supermarket sandwich maker Greencore has agreed a possible £1.2bn takeover deal for rival Bakkavor in a move set to create a food-to-go giant.
The pair have reached an agreement in principle on a potential cash-and-shares offer from Dublin-headquartered Greencore for London-based Bakkavor worth 200p a share. This marks a 33% premium on Bakkavor’s closing share price on March 13.
Bakkavor has sites across the Ƶ including in Somerset, Wiltshire, Aston in the West Midlands, Crewe in Cheshire, Barton in West Lancashire, and across the East of England and the South East.
The deal would create a combined food group with annual sales of about £4bn, according to the firms.
Greencore is a prepared food specialist, which supplies all major Ƶ supermarkets, as well as the likes of Marks & Spencer. Its Ƶ head office is in Worksop and it has 14 factories across the country. The group supplies nearly 750 million food-to-go items each year and employs about 13,300 staff.
Bakkavor, meanwhile, employs around 17,200 staff across 41 sites in the Ƶ, US and China. It makes around 3,500 different freshly prepared food products, including meals, salads, desserts, dips, sauces, sandwiches, and pizza and bread products.
Under the terms of the potential deal, Greencore shareholders would own around 56% of the combined group and Bakkavor shareholders would own about 44%.
Bakkavor’s board has said it would be minded to unanimously back the deal, should Greencore make a firm offer. Shares in Bakkavor rose 7%, while Greencore was 0.5% higher.
It comes after Bakkavor had rejected two previous approaches from Greencore.
The firms also said that as part of the deal, there would be a payment to Bakkavor shareholders should it sell off its US business within a year of any takeover by Greencore.
They added there would be “substantial synergies” from merging the two firms, which they are currently assessing and will outline “in due course”.
Eamon O’Hearn, national officer at the GMB trade union, said: “Companies ‘assessing synergies’ is often management speak for cost cutting.
“It is widely acknowledged by Government and the wider industry that the Ƶ food and drink industry needs more capacity, not less. GMB is calling for a commitment to no factory closures and no job losses.”
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