Greencore’s takeover of Bakkavor is set to be completed in January after the UK’s competition body cleared the transaction conditional on the sale of the Bristol soups and sauces business.
The Competition and Markets Authority (CMA) said today (17 December) it has “accepted undertakings in lieu of reference to a Phase-two investigation”, referring to Greencore’s commitment in November to dispose of that business in order to get the deal over the finishing line.
Dublin-headquartered Greencore agreed in November to sell the Bristol factory and business to The Compleat Food Group in the UK to allay competition concerns at the CMA. That agreement and pledge prevented proceedings moving beyond the initial Phase-one probe into the takeover.
Greencore confirmed last month that 300 workers at Bristol are part of the deal with The Compleat Food Group.
Today, the private-label and convenience food group provided a date of 16 January to complete the Bakkavor transaction having previously said it would be finalised “early” in the new year.
In a brief statement on behalf of both Greencore and Bakkavor, the two companies said the CMA has “accepted Greencore's undertakings in lieu of reference to sell its Bristol chilled soups and sauces manufacturing site to Compleat Food Group”.
Completion of the transaction, which has been in the pipeline since March, now becomes just a formality. The Bristol business disposal will be concluded by 17 January, a Greencore spokesperson confirmed today.
The takeover transaction been valued at around £1.2-1.5bn ($1.6-2bn) and will create a combined private-label business with revenue of circa £4bn.
The Bristol operation generated around £47m in revenue in the year to 26 September, equating to about 1% of Greencore and Bakkavor combined.
Post the takeover, Greencore shareholders will own around 59.8% of the new company, with Bakkavor investors holding the remainder.
Like UK-based Bakkavor, Greencore operates in food-to-go and convenience products supplied to major supermarkets such as Tesco, Sainsbury’s, Asda, Waitrose and Marks & Spencer.
Convenience categories feature chilled ready meals, chilled soups and sauces, pickles and frozen Yorkshire Puddings. Food-to-go includes sandwiches, salads, sushi and chilled snacks.
In November, Greencore reported its annual revenue for the year ended in September rose 7.7% to £1.95bn. Profit before tax climbed 29.3% to £79.5m.
Elsewhere, adjusted EBITDA increased 17.9% to £181.2m, and adjusted operating profit was up 28.9% at £125.7m. Adjusted EPS surged 46.5% to 18.6 pence.
Bakkavor’s most recent financial accounts show like-for-like revenue rose 5.1% in the year through December to £2.3bn. Adjusted operating profit increased 20.5% to £113.6m.
Net profit was £71.1m, up from £51.1m in the previous 12 months. Basic EPS rose 0.2 pence to 9.6p.
