Bakkavor said today (14 March) Greencore’s takeover bids undervalue its business.
Earlier today, Ireland-based Greencore revealed it had tabled two offers for Bakkavor in the last fortnight.
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The most recent bid, put forward on 7 March, was a mix of cash and shares and valued Bakkavor at £1.14bn ($1.47bn).
Under the terms of the offer, Greencore shareholders would own around 59.8% of the new company, with Bakkavor investors holding the remainder.
Greencore said bringing the two own-label suppliers together would create “a leading UK convenience-food business”.
UK-based Bakkavor rejected the second offer on Monday. In a statement today responding to Greencore’s disclosure of its bids, Bakkavor described the offers as “unsolicited, conditional, cash-and-share proposals”.
The company added: “The board of Bakkavor, together with its financial advisers, carefully evaluated the latest proposal and concluded that it significantly undervalued the company and its future prospects.”
Greencore said its second offer for Bakkavor implied a valuation of its target at 189p a share, including a “final dividend” that was part of the bid.
The company added the offer represented a 25% premium to Bakkavor’s closing share price yesterday and a 32% premium to the group’s three-month, volume-weighted, average share price.
UK-based Bakkavor makes products including ready meals and desserts for customers including Tesco.
In 2024, the company generated more than 80% of its £2.29bn underlying revenue in the UK but it also does business – and has factories – in the US and China.
Greencore, also listed in London, supplies chilled, frozen and ambient food from 16 factories in the UK. The company’s customers include major UK grocers including Tesco, Sainsbury’s and Asda. In the group’s last full financial year, it took in £1.81bn in revenue.
In 2018, Greencore announced its exit from the US after a decade in the market, selling its business there to an affiliate of Hearthside Food Solutions for $1.07bn.
The combined Greencore and Bakkavor would have “a diverse product offering, strong commercial relationships and market-leading capabilities in attractive segments across the UK convenience food landscape”, Greencore said today.
The group said the new business “would have enhanced capabilities across a complementary set of categories, facilitating greater innovation and benefiting both customers and consumers”.
It added: “There is potential for substantial synergies resulting from a combination of the two businesses, further enhancing growth and value creation for Bakkavor and Greencore shareholders.
“Greencore will continue to evaluate all strategic opportunities, including Bakkavor. There can be no certainty that a firm offer will be made.”
Asked by Just Food if Greencore would make a third bid, the company declined to comment but pointed to its belief that a combination of the businesses is “a highly compelling value creation opportunity for both Bakkavor and Greencore shareholders”.
Shares in Bakkavor were up 18.21% on the day at 178.5p at 15:33 GMT.
Shares in Greencore were down 1.79% at 187p at 15:34 GMT.
