Bakkavor has rejected two takeover bids from rival food manufacturer Greencore, the latest of which was worth £1.14bn.
Statements issued by the two firms on Friday afternoon revealed that an initial proposal was turned down by Bakkavor’s board on 27th February, with a second, revised offer also dismissed on 10th March. Bakkavor stated that it “significantly undervalued the company and its future prospects”.
Bakkavor’s share price jumped more than 18% to 179.5 pence following the news, its highest level in nearly six and a half years. However, it was still under the implied value of 189 pence per share from Greencore’s cash & share proposal that also included a dividend right.
Both companies are major suppliers to the supermarket multiples in the UK. Ireland-headquartered Greencore generated sales of £1.8bn last year, producing sandwiches and other convenience foods. Bakkavor, which turned over £2.3bn in 2024, supplies soups, ready meals, sauces, salads, and pizza from its 20 factories across the UK. However, the firm has faced disruption in the past year, with a strike at its Spalding site leading to shortages of some of its lines.
Greencore stated that its second offer provided “a highly compelling value creation opportunity” for both sets of shareholders, with bigger scale and cashflows if merged.
“The enlarged group would create a leading UK convenience food business with a combined revenue of £4bn, with a diverse product offering, strong commercial relationships and market-leading capabilities in attractive segments across the UK convenience food landscape,” it added.
Under the latest proposal, Greencore shareholders would own about 59.8% of the bigger group, and Bakkavor investors would own the rest.
Under takeover rules, Greencore has until 5pm on 11th April to make a firm offer for Bakkavor or walk away. The company stated on Friday that it would continue to evaluate all strategic opportunities, but there was no certainty a firm offer would be made.
