Greencore is on the cusp of acquiring fellow private-label convenience business Bakkavor after putting in a new cash and share offer valued at £1.2bn ($1.55bn).

Ireland-based Greencore said today (2 April) that Bakkavor’s board has indicated that “the key financial terms represent a value that it would be minded unanimously to recommend” the deal to its shareholders.

London-listed Greencore revealed in March that it had made two takeover bids for UK-based Bakkavor but both had been turned down.

The second of those valued the business at £1.14bn but Bakkavor, which is also listed in London, said the offer “significantly undervalued” the private-label supplier of ready meals and desserts to major UK supermarkets.

In a stock-exchange filing today, Greencore said the latest bid “implies” a 200 pence per share valuation for Bakkavor, based on Greencore’s “undisturbed” closing share price on 13 March, the last day before the offer period commenced.

That valuation includes a final dividend payment equating to the takeover offer of £1.2bn.

At 200p a share, Greencore added the offer represents a 32.5% premium over Bakkavor’s closing share price on 13 March and a 39.8% premium to the company’s volume-weighted closing price of 143p in the three months to 13 March.

Greencore said the acquisition, agreed in “principle” with Bakkavor, would create a “leading” UK convenience food business with a combined revenue of around £4bn. A deal would, however, still need clearance from competition regulators.

Should the transaction be approved by Bakkavor’s shareholders, Greencore would own 56% of the combined group, while the target shareholders would hold 44%.  

It is proposed that Agust Gudmundsson and Lydur Gudmundsson, currently non-executive directors of Bakkavor, would join the board of the combined business.

“The boards of Greencore and Bakkavor see compelling strategic, commercial and financial rationale for the possible offer and believe it provides a highly compelling value-creation opportunity for stakeholders in both Bakkavor and Greencore,” today’s filing read.

It added: “There is potential for substantial synergies resulting from a combination of the two businesses, further enhancing growth, investment in innovation and the customer and consumer proposition, and value creation for Bakkavor and Greencore shareholders.”

Fresh prepared food supplier Bakkavor also has operations in the US and China and generated £2.29bn in revenue in 2024. The company employs 17,200 people across 41 sites in the three markets. 

Dublin-based Greencore supplies chilled, frozen and ambient food from 16 factories in the UK. The company’s customers take in major UK grocers including Tesco, Sainsbury’s and Asda. In the group’s last full financial year, it took in £1.81bn in revenue.

Greencore’s shares were down 0.2% at 178.20p as of 10:51am BST in London today, while Bakkavor’s shares were up 7.9% at 191.80p.