Greencore has soothed UK competition concerns over the takeover of convenience food peer Bakkavor with a proposal to sell a soups and sauces plant.
The deal, announced in March, now moves a step closer toward being completed on target early next year after the Competition and Markets Authority (CMA) provisionally approved the remedy.
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In a joint statement with Bakkavor today (7 November), Greencore said it is in talks with “prospective” buyers for its chilled soups and sauces manufacturing facility in the English city of Bristol.
Dublin-headquartered Greencore, which like UK-based Bakkavor makes food-to-go and convenience products supplied to major supermarkets, said the Bristol site, along with “related business”, generates annual revenue of around £47m ($61.5m).
As part of its Phase-one investigation into the merger, the CMA flagged in October a potential competition conflict in own-label soups and sauces, while it did not have similar concerns for ready meals and salads.
Today, the regulator acknowledged the Bristol facility is the only one Greencore operates in the category as the CMA said it is “proposing to accept remedies offered”.
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By GlobalDataJoel Bamford, the executive director for mergers at the CMA, said in a statement: “Following close engagement with Greencore and Bakkavor, we’ve secured remedies which we believe have the potential to address our competition concerns – so we have accepted the remedies in principle today and will now work towards a final resolution.”
The CMA was more specific on where its previous concerns lay in chilled sauces, citing areas such as pasta and stir-fry sauces, as it noted in the wider scheme of things that both businesses supply the likes of Tesco, Sainsbury’s Asda, Waitrose and Marks & Spencer.
Meanwhile, London-listed Greencore added the £47m in revenue generated by the Bristol plant accounted for around 1% of sales in the year to 26 September.
Those full-year accounts are not due until the 18 November. However, in a trading update issued In October, Greencore said it expected to deliver £1.95bn in revenue for fiscal 2025, along with £125m in adjusted operating profit.
Bakkavor, which is also listed in the UK capital, left its adjusted operating profit outlook unchanged in September at £120-126m for fiscal 2025 but did not provide a revenue update. Sales in the previous year were £2.3bn.
In today’s statement, Greencore CEO Dalton Philips said: “The CMA’s acceptance in principle of the remedy is really good news and means we can now look to complete the Bakkavor deal in early 2026.
“In parallel, our focus is on finding the right new owner for our Bristol business.”
Philips’ counterpart at Bakkavor, Mike Edwards, added the latest development from the CMA “gives us even greater certainty that we will bring these two brilliant businesses together”.
Greencore shareholders would own around 59.8% of the new company, with Bakkavor investors holding the remainder.
