2nd Apr 2025 09:03
(Alliance News) - Greencore Group PLC on Wednesday said it has reached an "agreement in principle" for a takeover of London-based fresh food maker Bakkavor Group PLC.
Greencore, a Dublin-based manufacturer of convenience foods, has until next week Friday to announce whether it will make a firm offer for Bakkavor.
Greencore said a tie-up would create a firm with combined revenue of GBP4 billion.
Under the terms of the possible offer, Greencore will pay 85 pence in cash and 0.604 of a Greencore share per Bakkavor share.
In addition, Bakkavor shareholders would have retained the right to a final dividend of 4.8p per share. Exclusive of the final dividend, it implies a value of 200p per share in Bakkavor, and valuing the issued and to be issued share capital as a whole at around GBP1.2 billion.
Greencore said the offer valued Bakkavor at a 33% premium to the latter's undisturbed share price of 151p each on March 13, the day before the start of the offer period.
Bakkavor shares rose 6.6% to 189.50 pence each on Wednesday morning in London, giving it a market capitalisation of GBP1.10 billion. Greencore shares were down 1.0% to 176.80p, for a market cap of GBP772.8 million.
Greencore said Bakkavor "would be minded to unanimously recommend" the deal to shareholders.
Despite Bakkavor's larger size, due to the cash component of the deal, Greencore shareholders would own 56% of the enlarged company and Bakkavor shareholders 44%, Greencore said.
"In addition, Bakkavor shareholders will receive a contingent value right such that should there be a disposal of Bakkavor's US business, Bakkavor shareholders would be entitled to potential additional value if signing of a US disposal occurs no later than 30 June 2026 or a US disposal completes within 12 months of completion of the possible offer."
Greencore in March confirmed it had made two takeover approaches to Bakkavor.
The first proposal was made on February 25, then rejected by the Bakkavor board on February 27.
The second proposal was for 85p in cash and 0.523 of a Greencore share.
Inclusive of the final dividend, it implied a 189p valuation per Bakkavor share, GBP1.14 billion overall.
By Tom Budszus, Alliance News slot editor
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