Bakkavor announced today (14 March) that Greencore’s takeover bids clearly undervalue its business.
Earlier, Ireland-based Greencore revealed it had submitted two offers for Bakkavor over the past fortnight.
The latest bid, presented on 7 March, combined cash and shares to value Bakkavor at £1.14bn ($1.47bn).
According to the terms of the offer, Greencore shareholders would control approximately 59.8% of the new entity, while Bakkavor investors would hold the remainder.
Greencore emphasized that merging the two private-label suppliers would establish “a leading UK convenience-food business.”
In a decisive move, UK-based Bakkavor rejected the second offer on Monday. In a statement addressing Greencore’s disclosures, Bakkavor labeled the proposals as “unsolicited, conditional, cash-and-share proposals.”
Moreover, Bakkavor’s board, with assistance from financial advisers, thoroughly assessed the most recent proposal and determined it significantly undervalued the company and its future potential.
Greencore stated that its second offer for Bakkavor implied a valuation of 189p a share, inclusive of a “final dividend” that formed part of the bid.
This offer also represented a 25% premium against Bakkavor’s closing share price the previous day, and a 32% premium to the group’s three-month volume-weighted average share price.
Based in the UK, Bakkavor produces an array of products including ready meals and desserts for prominent retail clients such as Tesco.
In 2024, the company generated over 80% of its £2.29bn underlying revenue within the UK, while also maintaining operations – including factories – in the US and China.
Similarly, Greencore, also listed in London, provides chilled, frozen, and ambient food solutions from 16 factories across the UK. Its customer base includes major grocers like Tesco, Sainsbury’s, and Asda, generating £1.81bn in revenue during its last full financial year.
In 2018, Greencore exited the US market after a decade, selling its operations there to an affiliate of Hearthside Food Solutions for $1.07bn.
Greencore highlighted that the combined entity would offer “a diverse product offering, robust commercial relationships, and market-leading capabilities in attractive segments across the UK convenience food landscape.”
The group asserted that this new business would possess enhanced capabilities across a complementary range of categories, ultimately promoting greater innovation and benefiting both customers and consumers.
Furthermore, the potential for significant synergies arising from the merger could enhance growth and value creation for shareholders of both Bakkavor and Greencore.
“Greencore will continue to evaluate all strategic opportunities, including Bakkavor. There can be no certainty that a firm offer will be made,” the company stated.
When asked whether Greencore would consider a third bid, the company refrained from commenting. However, it reiterated its belief that combining the two businesses represents “a highly compelling value creation opportunity for both Bakkavor and Greencore shareholders.”
As of 15:33 GMT, shares in Bakkavor had risen by 18.21%, reaching 178.5p, while shares in Greencore had decreased by 1.79%, settling at 187p at 15:34 GMT.
