The UK’s prepared food sector faces a potential seismic shift as Greencore Group plc makes a bold £1.14 billion ($1.47 billion) bid for rival Bakkavor Group plc. Bakkavor’s board has unanimously rejected the March 7, 2025 offer, claiming it “significantly undervalues” their company despite representing a 25% premium over the previous day’s closing share price. This developing corporate drama highlights the strategic importance of consolidation in the competitive prepared foods market where scale and diversification increasingly determine success. The bid’s outcome could reshape the UK convenience food landscape, potentially creating a dominant market force with expanded production capabilities and enhanced innovation potential.
The Billion-Pound Offer: Breaking Down the Details
Greencore’s latest offer, their second attempt to acquire Bakkavor, comes with a substantial financial package structured as a combination of cash and stock. Under the proposal announced on March 7, 2025, Greencore shareholders would retain majority control with 59.8% ownership, while Bakkavor investors would hold the remaining 40.2%. The bid values Bakkavor at 189p per share (including final dividend), representing a significant 32% premium over the company’s three-month average share price.
This isn’t Greencore’s first attempt to bring Bakkavor into its fold. The move follows an earlier rejected bid on February 27, 2025, suggesting Greencore’s determined strategic interest in the acquisition. Despite the increased offer, Bakkavor’s leadership remains unconvinced. The board’s unanimous rejection cites concerns that the bid fails to capture the company’s true value and future growth potential in the prepared foods market.
The timing of this acquisition attempt coincides with broader industry consolidation trends, as food sector growth strategies increasingly favor mergers and acquisitions. For Greencore, securing Bakkavor would represent an immediate expansion of production capacity, market share, and product diversification – all valuable assets in the competitive UK food landscape.
The financial structure of the deal reveals Greencore’s confidence in creating value through combination. By offering both cash and stock components, Greencore provides Bakkavor shareholders with immediate returns while allowing them to participate in what they envision as a stronger, unified company. This approach typically suggests the acquiring company sees long-term synergistic benefits beyond immediate cost savings.
Company Profiles: Comparing Food Industry Giants
Understanding the potential impact of this acquisition requires examining the distinct strengths and operational footprints of both companies. Bakkavor Group plc has established itself as a specialist in fresh prepared foods, operating an extensive network of 46 factory sites spread across the UK, US, and China. With 2024 revenue reaching £2.29 billion, the company derives approximately 80% of its income from UK operations, where it maintains a strong relationship with major retailer Tesco.
In contrast, Greencore Group plc maintains a broader product focus, producing chilled, frozen, and ambient food products across its 16 UK-based factories. The company reported 2024 revenue of £1.81 billion, serving major grocery chains including Tesco, Sainsbury’s, and Asda. This diversification across product categories provides Greencore with certain operational advantages, though it lacks Bakkavor’s specialized focus on the premium fresh prepared foods segment.
The operational contrast between these companies highlights the complementary nature of their potential combination. Greencore would gain Bakkavor’s expertise in fresh prepared foods and access to international markets, particularly in China and the US. Meanwhile, Bakkavor would benefit from Greencore’s broader product development capabilities and potentially more efficient supply chain management.
From a manufacturing perspective, the combined entity would control 62 production facilities (46 from Bakkavor and 16 from Greencore), creating unprecedented production scale in the UK convenience food sector. This expanded footprint would likely yield significant operational efficiencies while potentially raising food manufacturing excellence standards across the merged company.
Market Reaction: Investors Weigh In
The financial markets have responded with mixed signals following the bid announcement. Bakkavor’s share price saw a dramatic 18.21% increase, reaching 178.5p as of March 14, 2025 (15:33 GMT). This surge, while substantial, still falls short of Greencore’s offer price of 189p per share, suggesting that investors remain skeptical about the deal’s completion prospects.
Conversely, Greencore’s share price experienced a modest decline of 1.79%, settling at 187p (as of 15:34 GMT, March 14, 2025). This downward movement likely reflects investor concerns about the premium being paid and potential integration challenges. The relatively small decrease, however, indicates that shareholders haven’t completely soured on the strategic rationale behind the acquisition attempt.
These market dynamics reveal an interesting tension between immediate value creation and long-term strategic positioning. While Bakkavor shareholders benefit from the immediate price appreciation, the board’s rejection suggests confidence in eventually securing greater value, either through improved offers or independent growth. Greencore investors appear cautiously supportive of the company’s acquisition strategy, despite the short-term financial implications.
Market analysts have noted that the price movements reflect broader industry trends related to food inflation and valuation within the sector. With rising input costs affecting manufacturers across the food industry, scale becomes increasingly important for maintaining profit margins – potentially justifying Greencore’s aggressive pursuit of expansion through acquisition.
Potential Benefits: The Strategic Vision
Greencore’s public statements frame this acquisition attempt as part of a larger vision to create “a leading convenience-food entity in the UK.” This ambition reflects the increasing strategic importance of scale in food manufacturing, where larger operations can better absorb fluctuating input costs and maintain consistent pricing for retail partners. The combined revenue of both companies would exceed £4 billion, creating a formidable market presence.
The synergies expected from such a merger extend beyond simple cost reductions. Bakkavor’s strength in fresh prepared foods would complement Greencore’s broader portfolio, creating opportunities for cross-category innovation and product development. This enhanced capability could prove particularly valuable as consumer preferences continue to evolve toward convenient yet premium food options.
For major retail clients like Tesco, Sainsbury’s, and Asda, a combined Greencore-Bakkavor would represent a more comprehensive supply partner capable of fulfilling diverse product needs. This consolidated relationship could streamline procurement processes for retailers while potentially creating more balanced negotiating dynamics between manufacturers and their retail customers.
Industry experts suggest that such consolidation might accelerate innovation within the prepared foods sector, as the combined entity would possess greater research and development resources. This could help address ongoing challenges related to food industry supply issues by developing more resilient products and manufacturing processes.
Challenges and Concerns: Not a Simple Combination
Despite the potential benefits, significant challenges would accompany any merger between these food manufacturing giants. Cultural integration represents a primary concern, as both companies have developed distinct operational approaches and corporate identities. Bakkavor’s specialization in premium fresh foods differs notably from Greencore’s broader product strategy, potentially creating friction during integration.
Regulatory scrutiny presents another hurdle. The UK’s Competition and Markets Authority (CMA) would likely review any proposed combination carefully, examining potential impacts on market competition and pricing power. With both companies serving many of the same major retailers, concerns about supplier concentration could trigger regulatory interventions or requirements for selective divestments.
Operational consolidation also poses practical challenges. The combined network of 62 manufacturing sites would likely require rationalization to eliminate redundancies and optimize production workflows. Such changes inevitably create uncertainty for affected employees and local communities where these facilities operate.
Supply chain dynamics represent another area of concern, particularly as food prices continue rising across categories. Both companies currently maintain separate supplier relationships and purchasing strategies. Harmonizing these approaches while maintaining uninterrupted production would demand careful planning and execution during any integration process.
Looking Ahead: Possible Scenarios and Industry Impact
As this corporate drama continues to unfold, several potential outcomes remain possible. Greencore has indicated it’s “continuing to assess strategic opportunities” while avoiding explicit commitments to a third bid. This deliberate ambiguity keeps pressure on Bakkavor’s board and shareholders while allowing Greencore flexibility in its next moves.
The most straightforward scenario involves Greencore returning with an improved offer that addresses Bakkavor’s valuation concerns. Industry analysts suggest a bid approaching 210-220p per share might prove more persuasive to Bakkavor’s board and shareholders. However, such an increase would significantly impact the financial rationale behind the acquisition, potentially making it less attractive to Greencore’s investors.
Alternatively, Bakkavor might explore defensive strategies, including seeking partnerships with alternative companies that better align with its specialty focus and international expansion plans. The company’s strong position in the US and Chinese markets makes it an attractive target for food manufacturers looking to establish footholds in these regions.
The broader prepared foods industry will feel ripple effects regardless of the outcome. If successful, this merger would establish a new benchmark for scale in the UK food manufacturing sector, potentially triggering additional consolidation among smaller competitors seeking to maintain market relevance. Even if unsuccessful, the bid highlights the increasing value placed on specialized food manufacturing capabilities and international production networks.
For retail partners and consumers, the consequences would materialize more gradually. A successfully combined entity could potentially deliver greater product innovation while achieving cost efficiencies that help moderate food industry pricing pressures. However, the reduced supplier competition might eventually translate to fewer options and potentially higher prices in certain product categories.
As March progresses, industry observers remain focused on potential signals from either company regarding next steps. Bakkavor’s shareholders now face important decisions about the company’s future direction, weighing immediate premium values against longer-term growth prospects. Meanwhile, Greencore must carefully balance acquisition enthusiasm against financial discipline as it considers its strategic response to Bakkavor’s latest rejection.