Bakkavor-Greencore Takeover Talks Extended: A Strategic Gamble with High Stakes

The deadline for Greencore Group PLC to formally propose its £1.2 billion takeover of Bakkavor Group PLC has been pushed to May 23, 2025—the second extension in a month. This delay underscores the complexities of merging two major UK convenience food players, even as investors appear cautiously optimistic about the deal’s potential.

The proposed transaction would combine Bakkavor’s fresh ready meals and desserts with Greencore’s chilled and frozen food operations, creating a £4 billion revenue giant. Under the terms, Bakkavor shareholders would receive 85 pence in cash and 0.604 Greencore shares per Bakkavor share, valuing the latter at 200 pence—a 32.5% premium over its closing price on March 13, 2025. If completed, Greencore would control 56% of the merged entity, with Bakkavor’s founders retaining board seats.

Why the Delays?

The extensions, granted by the UK Takeover Panel, aim to resolve lingering issues in confirmatory due diligence and finalize terms. Both companies supply major UK retailers like Tesco and Sainsbury’s, raising antitrust concerns that could delay or scuttle the deal. The Competition and Markets Authority (CMA) will scrutinize the merger’s impact on competition, particularly in the chilled and ambient food sectors.

Greencore’s need for additional time also reflects the challenge of aligning operational synergies. Bakkavor’s UK-centric revenue (80% of its £2.29 billion turnover) contrasts with Greencore’s broader footprint, including 16 UK factories and past US operations. Merging supply chains and talent pools could unlock savings, but execution risks remain.

Market Reaction: Optimism, but with Caveats

The May 9 deadline extension sent Bakkavor’s shares up 2.1% to 185.86 pence, while Greencore’s rose 0.3% to 189.00 pence. Over the past year, Bakkavor’s stock has surged 54%, outperforming Greencore’s 41% gain.

Investors are betting on the deal’s strategic logic: combining Bakkavor’s fresh food expertise with Greencore’s frozen and chilled capabilities could strengthen their collective position in a UK convenience foods market worth £20 billion. However, the prolonged timeline highlights unresolved uncertainties, including regulatory hurdles and the risk that Greencore might withdraw entirely by May 23.

Regulatory Risks and the Path Ahead

While the Takeover Panel has been flexible with deadlines, the CMA’s approval remains a critical barrier. The merger’s dominance in key product categories—such as ready meals and desserts—could prompt scrutiny. A CMA probe typically takes four to six months, but the UK’s fast-track review process might expedite the process if no competition concerns arise.

Bakkavor’s board has signaled support for the deal but cautions that “no certainty” exists. Even if Greencore meets the May 23 deadline, shareholders must still approve a “scheme of arrangement,” which requires 75% of Bakkavor’s investors to back it.

Conclusion: A High-Reward, High-Risk Gamble

The Bakkavor-Greencore deal hinges on three factors: regulatory clearance, shareholder approval, and Greencore’s ability to finalize terms by May 23. The 32.5% premium to Bakkavor’s shares reflects investor confidence in the merger’s strategic benefits, but risks remain.

If approved, the combined firm would dominate the UK convenience foods market, leveraging synergies worth an estimated £50 million annually (per management estimates). However, a CMA-imposed divestment or outright rejection could trigger a collapse in Bakkavor’s share price, which has already climbed to 185.86 pence—near its 52-week high of 193.30 pence.

Investors should weigh the 54% yearly gain in Bakkavor against the uncertainty of regulatory and shareholder approvals. The May 23 deadline is a pivotal moment; failure to meet it would likely erase much of Bakkavor’s recent gains. For now, the market is betting on a “yes”—but the cards remain stacked against a smooth resolution.