A statement released to the London Stock Exchange on 14 March revealed that prepared food manufacturer Bakkavor had rebuffed two acquisition offers from Greencore since 27 February.
The most recent bid valued Bakkavor at 85p per share plus a stake in Greencore, or approximately £1.14 billion, but was turned down on 10 March.
In the aftermath, a Bakkavor spokesperson said that the offer “significantly undervalued the company and its future prospects” and confirmed that it was unanimously rejected by the firm’s board.
With no news on a third offer yet to break, Food Manufacture asked Mark Field, director at food consultancy firm Prof Consulting Group, for his thoughts on Greencore’s approach.
“Within UK grocery retail, food to go continues to be a growth area for the major retailers especially under private label and increasingly demanding upon the level of technical capability or innovation,” Field said.
“With this in mind Greencore’s focus on Bakkavor makes clear strategic sense with the potential to develop a food to go powerhouse, leading capabilities, well established retailer relationships and at a time that premiumisation is a focus in latest product launches.”
When asked if he expects to see Greencore improve its offer, Field replied: “With the benefit of the likely synergies, it would be a surprise if they do not return with a third bid.
“However, with their appetite to grow through acquisition it will be interesting to see who they target next should they be unsuccessful.”
Food analyst and corporate finance director at Rollits LLP, Julian Wild, was even more bold in his prediction.
“I think Greencore and Bakkavor coming together is a deal which must happen at some stage,” Wild told Food Manufacture.
“There are loads of synergies and the chilled convenience market needs to be simplified.”
Touching on how such a deal would impact the wider sector, he added: “The retailers won’t like the lessening of supplier choice but this is all about own label and the multiples have only themselves to blame for squeezing their supply base and discouraging the sort of capital investment we saw in the 1980s and 1990s.
“Having missed out on Northern Foods over a decade again, Greencore cannot lose out again. In my view this is just about the price and there will be a deal.”
Watch this space.
