Greencore plans to divest its soups and sauces business in Bristol, UK, to The Compleat Food Group. This strategic move aims to address a regulatory hurdle in its acquisition of Bakkavor.
The Compleat Food Group has emerged as the buyer of the Bristol facility after Dublin-headquartered Greencore announced this month its intent to sell to secure approval from the Competition and Markets Authority (CMA).
A spokesperson for Greencore confirmed that the deal encompasses the entire Bristol soups and sauces business as a going concern, which includes approximately 300 employees at the plant.
Greencore stated, “The disposal is subject to formal CMA approval of the undertaking in lieu following completion of a statutory public consultation process,” without disclosing the financial terms.
The company reaffirmed earlier statements revealing that the Bristol operation generated approximately £47m ($61.7m) in revenue for the year ending 26 September, representing roughly 1% of the combined revenues of Greencore and Bakkavor.
The Compleat Food Group confirmed the Bristol deal in a statement, echoing Greencore’s observation that CMA approval is now required for the proposed acquisition.
In another notable development, The Compleat Food Group has acquired the Julienne Bruno dairy-free brand, as announced last week, after it entered administration.
Greencore also expressed optimism about completing the Bakkavor takeover “early” in the upcoming year.
While discussions regarding the Bakkavor merger have been ongoing since at least March, the CMA raised concerns in October about potential competition issues in the own-label soups and sauces sector but had no similar concerns regarding ready meals and salads.
To alleviate these concerns, Greencore proposed the sale of the Bristol plant to prevent the CMA from advancing to a Phase-two investigation after its Phase-one assessment.
Earlier this month, the regulator indicated it was “proposing to accept remedies offered” by Greencore.
In a separate announcement today, Greencore reported its full-year results.
Revenue for the 52 weeks ending on 26 September rose 7.7% to £1.95bn, while profit before tax surged 29.3% to £79.5m.
Adjusted EBITDA increased 17.9% to £181.2m, and adjusted operating profit saw a 28.9% rise to £125.7m.
Adjusted EPS soared 46.5% to 18.6 pence.
Greencore reported a 2.8% growth in underlying volume/mix, despite facing 2% “impacts” from inflation and pricing.
Like its UK counterpart Bakkavor, Greencore specializes in food-to-go and convenience products supplied to major supermarkets including Tesco, Sainsbury’s, Asda, Waitrose, and Marks & Spencer.
Post-acquisition, Greencore shareholders will retain approximately 59.8% of the new company, with Bakkavor investors owning the remainder.
Greencore generated £1.34bn in revenue from food-to-go categories, an increase of 7.2% compared to the prior year. Convenience revenues boosted by 8.3% reached £609.2m.
Food-to-go encompasses items like sandwiches, salads, sushi, and chilled snacks, while convenience products include chilled ready meals, soups and sauces, pickles, and frozen Yorkshire puddings.
