Greencore, the sandwiches and ready meals maker, has received clearance in principle from the UK competition watchdog to proceed with its £1.2 billion (€1.36 billion) takeover of Bakkavor, after offering to sell its Bristol manufacturing plant.
The Bristol facility makes chilled sauces and soups and generated £47 million of revenues for the financial year to the end of September – about 1 per cent of the sales of the planned combined group.
The concession has averted the deal being subjected to an in-depth, phase two investigation by the UK Competition and Markets Authority (CMA).
“The CMA’s acceptance in principle of the remedy is really good news and means we can now look to complete the Bakkavor deal in early 2026,” said Dalton Philips, chief executive of Greencore. “Our focus is on finding the right new owner for our Bristol business.”
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Mr Philips said there has been “strong interest” from potential acquirers of the chilled soups and sauces operation. “I’m highly confident we’ll get a good outcome here,” he added.
The deal to create a leading convenience food business in the UK, with a combined revenue of £4 billion, was announced in April. It will see existing Greencore investors own 56 per cent of the enlarged group, with Bakkavor investors holding the remainder.
The two convenience food groups share the same customers among big UK supermarkets – including Tesco, Marks & Spencer, Sainsbury’s, Waitrose and Asda – but have limited crossover in products. Bakkavor would add pizza, bread, desserts and dips to Greencore’s range, which already spans sandwiches to salads, sushi and ready-made meals.
The CMA raised concerns in October that the planned merger would affect competition in the supply of chilled sauces. It gave both companies a week to come up with a solution to address the issues raised by the authority before a stage two investigation was launched.
“The cost of our weekly shop matters to us all, so we must take decisions that ensure there is effective competition helping to keep product prices as low as possible on supermarket shelves,” said Joel Bamford, executive director of mergers at the CMA. “Our assessment found Greencore’s deal to buy Bakkavor could raise prices at the till.”
He added: “Following close engagement with Greencore and Bakkavor, we’ve secured remedies which we believe have the potential to address our competition concerns so we have accepted the remedies in principle today and will now work to towards a final resolution.”
Greencore was more than familiar with Bakkavor long before the merger was announced earlier this year. The latter had built up an 11 per cent stake in the Irish business before the 2008 financial crisis, stoking takeover speculation at the time at Greencore – then also 29.9 per cent owned by boomtime developer Liam Carroll. Speculation back then focused on whether Mr Carroll wanted Greencore’s defunct sugar plants in Carlow and Mallow for development.
Bakkavor, founded 40 years ago by Icelandic brothers Agust and Lydur Gudmundsson, sold its Greencore stake at a loss in October 2008 as the Gudmundssons saw their broader business empire come under pressure during the financial crisis. Bakkavor almost collapsed during the worst of that period.
The Gudmundssons lost control of the business for a period, before managing to regain it a decade ago with the help of a US hedge fund.
