Concerns over lack of competition in the supply of chilled sauces could hold up Greencore’s planned £1.2 billion (€1.38 billion) purchase of London-based peer Bakkavor.
The companies, which now have just a week to address the issues raised by the UK competition authority before a more in-depth phase two investigation of the proposed merger to the two convenience food giants is triggered, welcomed the announcement.
The Competition and Markets Authority (CMA) said the deal has “a realistic prospect of a substantial lessening of competition” in the supply of own-label chilled sauces in the UK. Only two rivals – Two Sisters Food Group and Billington Foods – would provide “material” competition, it said, adding they are both “weaker”.
Dublin-headquartered convenience food group Greencore and rival Bakkavor noted in a statement that they were “pleased” the watchdog had not raised competition concerns “in the vast majority of areas reviewed.”
RM Block
This sales sector amounts to less than 1 per cent of the combined revenue of the two firms, they said. The companies said they will “work constructively” with the competition authority to get the deal over the line.
Analysts at RBC said remedies to CMA competition concerns tend to involve divestment by one or other party to the transaction of their interest in the business segment causing concern.
Once the companies offer their remedies by November 3rd, the CMA will have five days to decide whether they go far enough. If approved, the companies would have 50 days to find a buyer and complete a transaction, a process that can be extended for a further 40 days.
“Given there has been ongoing communication with the CAM throughout this process, we expect Greencore and Bakkavor have already identified a potential remedy and are ready to move forward with further discussions with the CMA,” wrote RBC analysts Tania Maciver and Ben Pfannes-Varrow.
The CMA also examined the potential impact of the deal on the supply of own-label Italian chilled ready meals and own-label salads but did not raise concerns.
Dalton Philips, the chief executive of Greencore described the CMA process has “constructive”. He said the decision was a “welcome one”, noting that it confirmed “highly complementary nature of our businesses”.
Mr Philips said the company is working with the competition authority and Bakkavor “to complete the Bakkavor transaction early next year”.
“I’m genuinely excited about what 2026 has in store as we bring these two great businesses together to create a true UK national food champion to deliver high-quality, innovative food to customers and consumers,” he said.
Bakkavor chief executive Mike Edwards said the CMA decision was “positive news” which would allow the companies to “collectively work at pace and stay on track to complete the transaction in early 2026″.
Greencore secured backing from Bakkavor’s board for a £1.2 billion purchase of its London-based peer in April. This will create a convenience food business in the UK with combined revenue of £4 billion (€4.6 billion) and about 30,500 employees.
Existing Greencore investors will own 56 per cent of the group if the deal is given the green light by the CMA which began an investigation into the acquisition in July.
Greencore is a supplier to some of the biggest supermarkets in the UK, manufacturing more than 750 million sandwiches and food-to-go products each year.
Across 16 manufacturing sites, the Dublin-based company employs more than 13,000 people to produce convenience foods such as sandwiches, salads, sushi, ready meals, and soups.
Bakkavor, which was founded by the Icelandic brothers Lýdur and Ágúst Gudmundsson, is now headquartered in London and employs about 14,900 people, with more than 30 sites across the UK and the US.
Russ Mould, investment director at AJ Bell, said: “While the CMA seems to be largely relaxed about the merger between Bakkavor and Greencore, the slight issue flagged about own label chilled sauces has caused a touch of market disquiet.
“Given these operations account for a slim percentage of revenues across any combination, coming to an arrangement with the competition authority should not prove too difficult.”
Shares in Greencore, which is headquartered in Dublin but listed on the London Stock Exchange, fell by about 2.2 per cent in early trading on Monday. - Additional reporting, Reuters / PA
