Supermarket sandwich maker Greencore has agreed a £1.2billion takeover deal for rival Bakkavor in a move set to create a UK food-to-go giant.
The duo said in a joint statement the deal would create a ‘leading UK convenience food business’ with a combined revenue of around £4billion.
The agreement in principle on a potential cash-and-shares offer from Greencore valued Bakkavor at 200p per share, reflecting a 33 per cent premium on Bakkavor’s closing share price on 13 March.
Greencore is a prepared food specialist, which supplies all major supermarkets, including Marks & Spencer.
Greencore supplies nearly 750million food-to-go items each year and employs around 13,300 staff.
It has its headquarters in Dublin, with a British head office in Worksop and 14 factories.
Takeover: Supermarket sandwich maker Greencore has agreed a possible £1.2bn takeover deal for rival Bakkavor
London-based Bakkavor employs 17,200 staff across 41 locations in Britain, the US and China.
It makes around 3,500 different freshly prepared food products, including meals, salads, desserts, dips, sauces, sandwiches, and pizza and bread products.
Under the terms of the potential deal, Greencore shareholders would own around 56 per cent of the combined group and Bakkavor shareholders would own about 44 per cent.
Bakkavor’s board has said it would be minded to unanimously back the deal, should Greencore make a firm offer.
It comes after Bakkavor had rejected two previous approaches from Greencore.
The businesses also said that as part of the deal, there would be a payment to Bakkavor shareholders should it sell off its US business within a year of any takeover by Greencore.
They added there would be ‘substantial synergies’ from merging the two firms, which they are currently assessing and will outline ‘in due course.’
The pair added: ‘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.’
Agust Gudmundsson and Lydur Gudmundsson, currently non-executive directors of Bakkavor, would join the board of the combined group as non-executive directors.
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Supermarket sandwich mega deal as UK rivals eye £1.2bn tie-up