Greencore to Acquire Bakkavor: A £1.2 Billion Deal to Reshape the UK Food Market

Key takeaways:

• Greencore has agreed to purchase rival Bakkavor for £1.2 billion.
• The deal will create a UK food-to-go giant with a combined revenue of £4 billion.
• Approval from Bakkavor’s shareholders is required before finalizing the acquisition.

Introduction

In a significant development in the UK food industry, Greencore, known as the largest sandwich maker in the UK, announced its agreement to acquire Bakkavor, a competitor specializing in ready meals. This acquisition, valued at £1.2 billion ($1.55 billion), is set to create a food-to-go powerhouse with a combined revenue of approximately £4 billion. Key details of this strategic move include:

• Greencore will offer Bakkavor shareholders 85 pence in cash for each share, alongside 0.6 shares of Greencore.
• The deal represents a 32.5% premium over Bakkavor’s closing share price prior to the offer.
• The acquisition aims to enhance Greencore’s portfolio and improve market competitiveness as food demand in the UK continues to rise.

Detailed Analysis

The agreement between Greencore and Bakkavor follows previous bids that were rejected due to Bakkavor’s assessment of their underwhelming valuation. This deal highlights Greencore’s commitment to expansion in the convenience food sector, which has seen fluctuating demand but consistent growth prospects, especially following shifts in consumer behavior toward ready-to-eat meal options.¹

Greencore operates 14 factories in the UK, currently employing around 13,300 people. The company produces a variety of food items, ranging from sandwiches to sushi, and serves major UK supermarkets. Bakkavor, established by Icelandic entrepreneurs Ágúst and Lýdur Gudmundsson, generates approximately 85% of its revenues in the UK, catering to grocery chains such as Tesco and Sainsbury’s with prepared foods, including dips, salads, and ready meal offerings.²

The merger will result in Greencore shareholders owning approximately 56% of the combined entity, while Bakkavor shareholders will retain 44%. The transaction is still subject to approval from Bakkavor’s shareholders, which is anticipated to take place during their annual meeting in May 2025.³

With Groceries Code Adjudicator oversight and increasing competition in the convenience food sector, this acquisition places Greencore in a strong position to capitalize on existing market trends. Analysts are closely watching how the consolidation could impact pricing, supply chain efficiencies, and product innovation in the fast-evolving culinary landscape. The shift towards prepared foods has been accelerated by post-pandemic consumer behaviors, making this merger particularly timely.

Conclusion

The acquisition of Bakkavor by Greencore presents a pivotal opportunity for growth in the UK convenience food market. As demand for ready-to-eat meals rises, investors may see this merger as a promising development that could enhance shareholder value and financial performance for the new entity. Retail investors should monitor the upcoming shareholder votes and regulatory approvals closely, as these will be crucial for the finalization of this landmark deal.

References

¹ ‘Business Vikings’ in line for payday as deal agreed to create £4bn UK food giant. The Guardian. Retrieved April 2, 2025.

² Greencore to Buy U.K. Convenience Food Rival Bakkavor for $1.55 Billion. Wall Street Journal. Retrieved April 2, 2025.

³ Greencore to buy rival food-to-go firm Bakkavor for £1.2bn. The Grocer. Retrieved April 2, 2025.