In a significant development for the convenience food industry, Greencore Group has made two unsuccessful attempts to acquire rival Bakkavor Group. The latest bid, valued at £1.14 billion ($1.47 billion), was firmly rejected by Bakkavor’s board on March 7, 2025. This cash and shares offer, which implied a valuation of approximately 189p per share, was deemed insufficient by Bakkavor’s leadership team. “The board of Bakkavor… concluded that it significantly undervalued the company,” stated official communications from the target company. The rejection highlights growing tensions in the competitive prepared foods market as companies seek consolidation amid rising operational costs and changing consumer preferences.
Breaking Down the Financial Proposal
The financial details of Greencore’s bid reveal ambitious plans to create a dominant force in food manufacturing. At £1.14 billion, the offer represented a significant premium over Bakkavor’s trading price before bid rumors began circulating. The implied share price of £1.89 per share was approximately 25% above Bakkavor’s average trading price over the previous three months, a premium that Greencore clearly felt justified the acquisition attempt.
Bakkavor’s rejection stems from its strong financial position, with 2024 UK revenue exceeding £2.29 billion. Over 80% of the company’s revenue comes from its robust UK operations, where it has established deep relationships with major retailers. By comparison, Greencore reported a last full-year revenue of £1.81 billion, making this acquisition attempt a bold move to significantly expand its market presence.
When placed in industry context, these figures demonstrate why Bakkavor feels undervalued. The company has maintained growth even amid food industry economic challenges that have impacted many competitors. Its revenue-to-factory ratio exceeds industry averages, with its 23 UK facilities generating more revenue per site than many competitors.
Market Reacts to Rejected Takeover Bid
Financial markets responded immediately to news of the rejected bid. Bakkavor shares surged by over 18% to around £179p following the announcement, indicating that investors anticipate either an improved offer from Greencore or potential interest from other suitors. This sharp rise reflects market consensus that Bakkavor’s intrinsic value likely exceeds the initial offer.
Conversely, Greencore’s shares fell by approximately 1% after the bid rejection became public. This modest decline suggests investors remain cautiously optimistic about Greencore’s strategic direction, even if this particular acquisition attempt has stalled. The relatively minor drop indicates shareholders may support future acquisition efforts or alternative growth strategies.
Stock market reactions to merger announcements often provide valuable insights into investor sentiment. In this case, the divergent movements suggest the market agrees with Bakkavor’s assessment that the offer undervalued its operations and future prospects. Trading volumes for both companies also spiked, with Bakkavor seeing nearly five times its average daily volume as investors repositioned based on the news.
Strategic Vision Behind the Merger Attempt
Greencore’s pursuit of Bakkavor reflects a clear strategic expansion plan aimed at strengthening its position in the ready-to-eat food sector. The proposed merger would have created one of Europe’s largest prepared food manufacturers, with combined annual revenue exceeding £4 billion. Such scale would provide significant leverage in negotiations with both suppliers and retail customers.
Cost synergies were a central component of Greencore’s proposal, with projected annual savings of £75 million through combined operations. These savings would primarily come from consolidated production facilities, streamlined distribution networks, and reduced administrative overhead. For shareholders, these synergies represented a compelling aspect of the merger proposal, promising improved margins and potential dividend growth.
Beyond cost reductions, Greencore emphasized growth opportunities from combining complementary product portfolios. Bakkavor’s strength in fresh prepared meals would have enhanced Greencore’s existing lineup of sandwiches, salads, and sushi. This expanded offering could potentially accelerate growth in the expanding ready meal sector, particularly as consumer demand for convenient, fresh food options continues to increase post-pandemic.
Industry analysts note that consolidation makes strategic sense in the current market environment. Rising ingredient costs, labor challenges, and increased energy expenses have squeezed margins for food manufacturers. Larger operations typically benefit from economies of scale, allowing them to better absorb these pressures while maintaining competitive pricing.
Bakkavor’s Market Position and Growth Trajectory
Bakkavor’s rejection of the offer highlights the company’s confidence in its independent growth strategy. With 23 production facilities across the UK, the company has built a formidable manufacturing network that allows it to serve major retailers with fresh, prepared foods on tight delivery schedules. This infrastructure represents significant value that wasn’t adequately reflected in Greencore’s offer price.
The company’s international expansion further strengthens its growth narrative. Beyond its UK operations, Bakkavor operates nine facilities in the United States and five in China, giving it access to the world’s two largest consumer markets. These international operations position Bakkavor to capitalize on global food manufacturing trends and reduce dependence on the UK market, which has faced challenges related to Brexit and economic uncertainty.
Product innovation has been a key driver of Bakkavor’s recent success. The company has responded effectively to changing consumer preferences, launching over 200 new products in the past year alone. Its focus on premium ready meals, plant-based options, and globally-inspired flavors has resonated with consumers willing to pay for convenience without compromising on quality or taste.
Several analysts have noted that Bakkavor’s current strategy is delivering results that justify a higher valuation. The company reported a 7% increase in like-for-like sales in its most recent quarter, outperforming the broader prepared foods category. This growth trajectory suggests Bakkavor’s board has reasonable grounds for believing the company’s independent future holds greater value than Greencore’s current offer.
Greencore’s Evolution and Acquisition Strategy
Greencore’s pursuit of Bakkavor represents the latest chapter in the company’s strategic transformation. Founded in Ireland, Greencore has evolved from its origins to become a specialist in chilled foods with particular strength in food-to-go categories. Its core products include sandwiches, salads, and sushi, primarily distributed through UK retail channels.
The company’s recent history includes significant strategic pivots. In 2018, Greencore exited the North American market, selling its US business for $1.07 billion to focus on its UK operations. This move simplified the business and provided capital for debt reduction and shareholder returns, but also limited Greencore’s geographic diversification compared to Bakkavor’s multi-continent presence.
Acquisitions have played a central role in Greencore’s growth strategy. Prior to targeting Bakkavor, Greencore successfully integrated several smaller UK food manufacturers, expanding its product range and production capacity. These previous acquisitions demonstrate Greencore’s experience with merger integration, though none approached the scale and complexity of the proposed Bakkavor deal.
Industry observers speculate that Greencore may return with an improved offer. The company’s Dublin headquarters and Irish heritage provide potential tax advantages and operational synergies that could justify a higher bid. However, any new offer would need to substantially improve on the valuation to overcome Bakkavor’s stated concerns about undervaluation and gain support from its food industry leadership team.
Future Implications for the Convenience Food Sector
The rejected bid has broader implications for the entire convenience food industry. Consolidation pressure continues to build as manufacturers seek scale to counter rising operational costs and increase bargaining power with both suppliers and retail customers. Bakkavor’s rejection of Greencore’s offer may trigger interest from other potential acquirers, including private equity firms with food industry portfolios.
For consumers, the outcome of this acquisition attempt could influence product availability and pricing. A combined entity would potentially have greater resources for product development and innovation, but reduced competition might eventually impact consumer choice and pricing. Independent Bakkavor may continue its focus on premium offerings, while Greencore maintains its strength in mainstream convenience foods.
Suppliers to both companies are watching developments closely. A merged entity would represent a more significant customer with potential influence over pricing and terms. Agricultural producers and food supply chain partners may need to adapt strategies depending on whether further consolidation occurs in this sector.
The convenience food market continues to evolve rapidly in response to changing consumer lifestyles and preferences. Both companies face similar challenges, including increasing demand for sustainable packaging, healthier ingredients, and authentic flavors. Whether operating independently or eventually combining forces, Greencore and Bakkavor will need to address these market shifts to maintain growth and profitability.
As consumers, we’ll continue to benefit from the innovation and competitive pricing that results from a healthy prepared foods industry. The dynamic between these two major players illustrates how companies must balance growth ambitions with shareholder value considerations. For those who enjoy the convenience of ready-to-eat meals, the outcome of this corporate maneuvering will ultimately shape the products available in store refrigerators for years to come. If you have a favorite local shop that creates exceptional prepared foods, consider submitting them to our business directory to help others discover these culinary treasures.