Latest news with #Bakkavor
Yahoo
21-05-2025
- Business
- Yahoo
Greencore tests CMA mettle in takeover bid for Bakkavor
The big question for Greencore is whether the UK's competition regulator will seek to block its takeover of Bakkavor, which would create a dominant player in the country's private-label food-to-go and convenience categories. Besides potential opposition to the deal by the Competition and Markets Authority (CMA), little now stands in the way of Dublin-headquartered Greencore sealing the bid for the UK-based business after the majority of Bakkavor shareholders approved the offer (after having two knocked back). The rest now vote at a meeting in July. Jobs could be a roadblock to Greencore finalising the circa £1.2-1.5bn ($1.6-2bn) transaction as the listed company has estimated up to 5% of the combined workforce could go under an offices and factory consolidation process. That would amount to as many as 1,525 staff given the employee numbers provided (Greencore 13,300 and Bakkavor 17,200). Nevertheless, the CMA's key consideration in such large-scale corporate combinations is primarily focused on whether the bringing together of companies would cause a 'substantial lessening of competition', followed by any positive or negative implications for consumers. Job losses could be considered if there's a potential competition-linked component. Such lessening seems unlikely as analysts point out a limited crossover between the two businesses in terms of portfolio duplication. However, ready meals could prove contentious given both Greencore and Bakkavor play in that area in competition with branded manufacturers. Sandwiches and prepared salads are other crossover segments that could sway the CMA's hand, supplied to supermarkets under their own-label food-to-go offerings. Bakkavor also produces bagged salads for the major chains. What Bakkavor would mainly bring to Greencore's portfolio is pizza, breads, desserts and chilled dips. Those products would complement Greencore's own portfolio, which ranges from sushi to chilled snacks such as quiche, soups, sauces and pickles, and Yorkshire puddings. Consumers could also benefit – another overarching factor the CMA assesses – given the increased firepower the combined entity would have over setting prices to the retailer. While that could potentially lead to lower on-shelf prices, it does on the other hand give the seller more leverage to increase prices to preserve or boost profit margins – perhaps the more likely scenario. 'The combined group's portfolio is a key part of the strategic, commercial and financial rationale for the transaction,' Greencore noted last week as it confirmed the company had 'received irrevocable undertakings' from Bakkavor shareholders holding 69.4% of the shares to accept the offer, which has now been in the pipeline since March. However, Greencore suggested in last week's filing it might walk away from the Bakkavor deal should the CMA prove to be heavy handed, citing rule 13.5 of the UK Panel on Takeovers and Mergers codes. 'While Greencore and Bakkavor are confident in the approach to secure approval of the transaction by the CMA in a Phase 1 investigation without undertaking any remedies that are material to the combined group, Bakkavor shareholders and Greencore shareholders should note that, if the CMA condition is not satisfied, including if Greencore and Bakkavor do not both agree to undergo a CMA Phase 2 reference and/or the CMA requires remedies that are material to the combined group, Greencore intends to seek the panel's consent to invoke the CMA condition in accordance with Rule 13.5(a) of the Takeover Code to lapse the transaction.' Rule 13.5 is detailed as follows by the takeover panel on its website. 'An offeror may only invoke a condition or pre-condition so as to cause the offer not to proceed, to lapse or to be withdrawn with the consent of the Panel. The firm offer announcement and the offer document must each incorporate language which appropriately reflects this requirement. 'The Panel will normally only give its consent if the circumstances which give rise to the right to invoke the condition or pre-condition are of material significance to the offeror in the context of the offer.' From the CMA's perspective, a Phase 1 investigation is typically launched to determine if a merger would result in a significant lessening of competition. Phase 2 follows should the regulator decide there is a fair risk of that prospect and involves an in-depth probe to ascertain and verify the facts. Speaking to Just Food, an industry source gave some insight, suggesting the CMA might just lean toward approving the Greencore-Bakkavor deal but conditions could still be imposed. 'The CMA is a body that's a law unto itself, albeit it has been encouraged by government to be more pro-growth and we may be seeing a slight or evolving position from the CMA in terms of how it looks at deals. Whether that means the likelihood of more deals coming through remains to be seen,' the source says. 'There's a remarkably limited overlap between Bakkavor and Greencore in terms of what they actually produce.' A business combination would provide more scale around the purchasing of goods and ingredients, a reduction in overheads costs and perhaps potentially lead to production and logistics efficiencies, the source adds. Dalton Philips, who joined Greencore as CEO in September 2022 with a pledge to return the business to pre-Covid levels of profitability – a goal now expected to come to fruition this year based on updated guidance last week – will head up the combined group post transaction. Seemingly appearing to appease any CMA opposition, the former Morrisons' chief said: "The combination of Greencore and Bakkavor is an unrivalled opportunity to create a true UK national food champion with an even greater breadth of category range and deeper customer relationships. 'We are bringing together two experienced teams and our complementary portfolios will drive benefits for customers and consumers across the UK. The combined group will be able to invest more in innovation and product development ensuring we can provide the consumer with greater food choices at more points in the day, bringing together Greencore's 'food for now' expertise with Bakkavor's 'food for later' portfolio.' The deal, which will lead to a business merger with around £4bn in revenue, is expected to be completed 'early' in 2026 subject to the competition authority's approval. It would seek to achieve annual run-rate pre-tax cost synergies of at least £80m by the end of the third year. Greencore said in last week's filing that both companies are 'confident in their approach to securing approval of the transaction by the CMA in a Phase 1 investigation without undertaking any remedies that are material to the combined group'. Karel Zoete, a food analyst at Kepler Cheuvreux, suggests the CMA is likely to see the deal through even if it means the sale of say a ready meals factory each for both parties. However, between them, Greencore and Bakkavor have an extensive manufacturing network. Greencore operates 16 sites, along with 17 distribution centres and transport hubs in the UK, it said in the filing, which added Bakkavor has 40 plants spread across three markets – the UK, the US and China. Nevertheless, Bakkavor announced in April it was selling the China business, including its factories, while Greencore has set a condition in the takeover document that the company will also exit the US to create a purely UK-centric business post the transaction. Greencore itself left the US in 2018 under the guidance of Philips' predecessor Patrick Coveney after failing to make a mark. The combined company would have much more power to invest in innovation and to invest in automation, traceability, quality and sustainability Karel Zoete, Kepler Cheuvreux 'Based on preliminary analysis completed to date, this [the merger] is expected to lead to rationalisation in manufacturing sites currently operated by Greencore and/or Bakkavor,' the filing document read. Zoete says any factory consolidation is unlikely to be 'massive' given Greencore has outlined recently it is operating at a capacity utilisation rate of 85%, and he suggests it's a similar position for Bakkavor. 'There's a very clear cost synergy story on the central overhead commercial organisation. The second source of synergies is very much on the supply chain, distribution and procurement,' he adds. 'The combined company would have much more power to invest in innovation and to invest in automation, traceability, quality and sustainability.' Greencore supplies all the major supermarkets in the UK, along with the discounters, food-to-go convenience and coffee shops, travel retail outlets, and the foodservice channel. Zoete sets out his thinking: 'Where there's an overlap, like salads and meals, supermarkets can choose alternative suppliers but there's not an alternative sandwich supply if you're a Marks and Spencer, for instance. 'For consumers, you have the benefit of a much more competitive and financially strong group through a leader [in the field] that can invest in automation and robotisation, which will be important for affordability and quality because of the surging labour costs.' Greencore said in the filing it has recently invested £15m in automation, adding that while investments are 'expected to increase over time, the combined group would have the resources and capability to accelerate the focus and investment to drive value for shareholders, customers and consumers'. Following the completion of the takeover, on the condition it is approved by the CMA, Greencore shareholders would own around 56% and those of Bakkavor about 44%. However, while current Greencore CEO Philips would head up the combined business, along with his finance chief Catherine Gubbins, the top executives at Bakkavor are expected to exit. Bakkavor CEO Mike Edwards and CFO Lee Miley would remain with the combined group for a yet-to-be set 'period' to help oversee the integration. The board would be overseen by Greencore's current director team, with the Bakkavor founders Agust and Lydur Gudmundsson becoming non-executive directors. All other Bakkavor directors 'will resign', according to the filing. Eyes are now focused on the CMA with Greencore's bid already accepted by the majority of Bakkavor shareholders, and, whether the competition authority will bow to government pressure for more flexibility in deal-making decisions. "Greencore tests CMA mettle in takeover bid for Bakkavor" was originally created and published by Just Food, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. 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Daily Mail
15-05-2025
- Business
- Daily Mail
Fears for 1,500 jobs as sandwich maker Greencore agrees to buy rival Bakkavor in £1.2bn deal
Supermarket sandwich maker Greencore has agreed to buy rival Bakkavor in a £1.2billion takeover deal – sparking fears of 1,500 job losses and factory closures. Greencore will pay £2 a share for Bakkavor to form a combined food group with annual sales of about £4billion. But around 5 per cent of the combined workforce of 30,500, or 1,525 staff, could be cut. Trade union Unite called for an urgent meeting with bosses with national officer Bev Clarkson saying it was 'bad news' for consumers as prices are rising, adding 'fewer competitors will likely lead to faster price rises'. Greencore shareholders will own around 56 per cent of the combined group and Bakkavor 44 per cent. Shares in Greencore were up 0.3 per cent while Bakkavor rose 1.7 per cent. Greencore supplies all major UK supermarkets and the likes of Marks & Spencer. It has its HQ in Dublin, and 16 factories and 17 distribution centres in the UK. It employs about 13,300 staff. Bakkavor has 17,200 staff at 40 sites in the UK, US and China, and about 20 factories in the UK. It makes around 3,100 freshly prepared food products. Bakkavor had rejected two previous approaches from Greencore. Takeover: Supermarket sandwich maker Greencore will pay £2 a share for Bakkavor to form a combined food group with annual sales of about £4bn
Yahoo
15-05-2025
- Business
- Yahoo
FTSE 100 climbs after UK economy grows faster than expected
The FTSE 100 rose on Thursday after figures showed the UK economy grew faster than expected in the first months of this year. London's blue-chip index ended the day up 48.7 points to finish at 8,633.75, a 0.57% increase. Earlier in the day, official data showed gross domestic product (GDP) increased by 0.7% between January and March, ahead of expectations. Chancellor Rachel Reeves said the figures 'show the strength and potential of the UK economy'. But she acknowledged there was 'more to do', with the latest figures covering the period before US President Donald Trump's 'liberation day' tariff announcements. Danni Hewson, an analyst at AJ Bell, said the economy looks 'a whole lot more robust than many people had expected'. 'Of course, these figures are backwards-looking and the real impact of those changes won't be clear for months to come. Indeed, the latest UK jobs data hints that fissures have already formed. 'There will have been plenty of manufacturers seeking to get ahead of Donald Trump's tariffs by front-loading production and exports, and even with a trade deal between the US and UK there is still a huge amount of uncertainty about what trade will look like over the rest of the year.' In Europe, Germany's Dax rose 0.65% and France's Cac 40 rose 0.21%. On Wall Street, the S&P 500 was up 0.18% as UK markets were closing, while the Dow Jones was down 0.26%. Sterling was up 0.18% against the US dollar at 1.3287, while it was 0.17% up against the euro at 1.1882. In company news, supermarket sandwich maker Greencore agreed a £1.2 billion takeover deal for rival Bakkavor in a move that will create a food-to-go giant with around 30,500 staff. Under the cash-and-shares deal, Greencore will pay £2 a share for Bakkavor, which it said is a 33% premium on Bakkavor's closing share price on March 13. The tie-up – structured as a reverse takeover – will form a combined food group with annual sales of about £4 billion which supplies many of the UK's biggest supermarkets and retailers. After an initial jump, Greencore shares rose 0.32%. And ITV said it is bracing for a double-digit plunge in advertising revenues after last year was boosted by the Euros football tournament, but said it does not expect its production arm to be hit by US President Donald Trump's proposed film tariffs. The group said it was still assessing the 'possibility of trade tariffs in the US', but added that its ITV Studios business should not suffer a direct impact if Mr Trump went ahead with his threat to impose a 100% tariff on international films. Shares fell 1.39% on Thursday. The biggest risers on the FTSE 100 were Hikma Pharmaceuticals, up 143p to 2084p, Compass Group, up 97p to 2637p, Fresnillo, up 34.5p to 1016p, BAE Systems, up 54p to 1755p, and National Grid, up 30.5p to 1046p. The biggest fallers on the FTSE 100 were 3i Group, down 177p to 4020p, Sage Group, down 49p to 1230.5p, BP, down 12.75p to 368.25p, Anglo American, down 57.5p to 2143p, and St James's Place, down 25.5p to 1071p.
Yahoo
15-05-2025
- Business
- Yahoo
Greencore receives majority approval from Bakkavor shareholders in takeover approach
Greencore has moved a step closer to sealing the takeover of fellow convenience food business Bakkavor as both boards have now put their recommendations behind the transaction. In an update on proceedings today (15 May), Dublin-headquartered Greencore said it has 'received irrevocable undertakings' from Bakkavor shareholders holding 69.4% of the shares in the UK-based business to accept the offer. Shareholders of Greencore, which first proposed a deal for Bakkavor early in March, will now have to vote on approving the deal on or around 4 July, according to a stock exchange filing. In the meantime, Greencore's directors have already given the greenlight to the transaction, which has been valued at around £1.2bn ($1.6bn) to create a combined private-label business with revenue of circa £4bn. Greencore CEO Dalton Philips said: 'The combination of Greencore and Bakkavor is an unrivalled opportunity to create a true UK national food champion with an even greater breadth of category range and deeper customer relationships. 'We look forward to welcoming Bakkavor's employees and creating an exciting, combined business for all stakeholders. Bakkavor is the ideal partner for Greencore and we look forward to delivering on the significant growth potential of the enlarged business.' Conversely, Bakkavor shareholders are expected to meet on or around 7 July to vote on accepting the deal. Greencore suggested the takeover is likely to be cemented 'early' in 2026, but it will still need approval from the UK's Competition and Markets Authority. If cleared, Bakkavor shareholders will receive 0.604 new Greencore shares at 85 pence each, along with one so-called contingent value right. The contingent proportion relates to the proposed sale of Bakkavor's US operations, Greencore said today as the ready meals to sandwiches supplier simultaneously raised its outlook for adjusted operating profit for fiscal 2025. 'Bakkavor may, prior to the effective [transaction] date, sell the US business if it determines that such a sale is in the best interests of Bakkavor, having regard to the best interests of its US customers, employees and other stakeholders, which are highly valued by Bakkavor,' Greencore said today. If the sale of the US business has not been agreed by the takeover date, Greencore will still proceed to offload the business. Mike Edwards, the CEO of Bakkavor, added: 'Combining with Greencore would bring together two businesses with the best people in the industry allowing us to take a 'best-of-both approach' to drive performance on every level. 'The combined business will create more opportunities for colleagues, allow us to do an even better job for customers, and be even more resilient.' Bakkavor had already announced in April the planned sale of its China operations to local firm Lihe Xing (Qingdao) Food Technology Co. for around £50m. That business generated £26.4m in revenue for Bakkavor in the first quarter to 29 March, while the US operation contributed £59.2m, the company said in a trading update today. Bakkavor's group revenue grew 3.9% on a like-for-like basis to £556.6m. The UK segment saw sales rise 2.7% to £471m. Meanwhile, Greencore said in its own trading update that first-half revenue to 28 March increased 6.5% to £922m. Adjusted operating profit climbed 59.7% to £45.2m. Greencore updated its full-year outlook for that metric to a range of $114-117m, 'bringing the group to above pre‐pandemic levels of profitability'. In April, Greencore had forecast adjusted operating profit to be 'ahead' of market expectations of £112-115m. Elsewhere, Greencore's adjusted EBITDA rose 30.8% to £73.1m. Adjusted profit before tax more than doubled to £34.8m from £16.9m. Greencore's shares were down 1% as of 11:35am BST in London today at 187 pence. Bakkavor's shares were relatively flat at 187.20p. The directors of Greencore have suggested the combination with Bakkavor will create 'annual run-rate pretax cost synergies of at least £80m by the end of the third year following completion' of the deal, according to today's filing. Greencore added that the Bakkavor board sees the transaction as a 'highly compelling proposition', implying an enterprise value of £1.5bn, a multiple of 7.9 times its adjusted EBITDA for the year to 28 December. Simon Burke, the Chair of Bakkavor, said: 'Having considered a combination previously, we believe that this transaction now proposes terms that we consider are very attractive to Bakkavor's shareholders. 'The transaction offers shareholders a significant premium, with an attractive combination of cash on completion and the ability to participate in the future value creation anticipated from bringing the two businesses together. For this reason, our board is unanimously recommending it to shareholders.' "Greencore receives majority approval from Bakkavor shareholders in takeover approach" was originally created and published by Just Food, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Irish Independent
15-05-2025
- Business
- Irish Independent
Greencore to keep Irish HQ as springboard for growth, says CEO
Mr Philips and Greencore chief financial officer Catherine Gubbins also said that additional synergies beyond the £80m that the group believes could be extracted from its acquisition of Bakkavor are possible. Greencore confirmed on Thursday that the terms of the planned takeover of Bakkavor have now been formally agreed by the boards of the two companies. Irrevocable undertakings representing just over 69pc of shares in Bakkavor have now been received by Greencore in respect of the deal. About 75pc of shares must be voted in favour to push it over the line, which is now a virtual certainty. Mr Philips said Greencore, known in a previous incarnation as Irish Sugar, will celebrate 100 years in business next year. Greencore currently generates virtually all its revenue in the UK, and the combined group including Bakkavor will have annual sales of about £4bn, almost all of it also delivered in the UK. 'We're an Irish business,' said Mr Philips. 'We're an ambitious business. In time, we may look elsewhere for growth opportunities. Being headquartered in Ireland gives you that platform for future growth in other jurisdictions. I don't see any reason why we would want to change where we are currently headquartered.' Ms Gubbins said having the group headquarters in Ireland would ease the path for future expansion. She said it is 'absolutely' the case that having the company based in Ireland would make it easier to expand within the European Union, for instance, given that the UK is no longer a member of the trading bloc. Greencore is targeting half of the projected synergies from the deal being achieved in the first year, 85pc by the second and all by the third year. 'In terms of synergies, we're looking at at least £80m,' said Mr Philips. 'We're very confident that we can do that. This is a combined business with a £4bn sales base. The first step is to deliver the £80m and then probably re-group and see is there more opportunities. We haven't put any revenue synergies into our models, so this is cost-driven, but there will in time be lots of other opportunities to go after.' ADVERTISEMENT The bulk of the initial cost savings – about 45pc – are expected to be achieved through the elimination of duplicate organisational functions, such as head office and other senior management roles. The combined group will have about 30,500 employees, mostly spread across about 35 production sites in the UK. Mr Philips pointed out that Greencore already has a high annual attrition rate of staff, at 20pc, with people constantly moving in and out of the business. Greencore and Bakkavor both include major retailers such as Tesco, Sainsbury, Marks & Spencer and Asda among their customers, but providing different food products. Greencore generates two-thirds of its revenue from food-to-go products such as sandwiches, sushi and salads, while Bakkavor also makes desserts, pizzas and bread, for instance. Greencore also reported a strong set of first-half results on Thursday, with its pre-tax profit jumping 82pc to £26.7m.
