EU and US could reach trade deal this weekend - Reuters
On Thursday, Deutsche Bank (ETR:DBKGn) analyst Damian McNeela increased the price target for Bakkavor Group Plc (BAKK:LN) to GBP2.00, up from GBP1.70. The Hold rating on the stock remains unchanged. The revision follows the announcement that Greencore has proposed a 200p per share offer for Bakkavor, which includes 85p in cash, a 4.8p dividend, and 0.604 shares of Greencore stock.
The proposed acquisition values Bakkavor at approximately £1.2 billion. The terms of the deal translate to a price-to-earnings (PE) ratio of 16.7 and an enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) multiple of 7.7 for the calendar year 2025.
Under the terms of the deal, Bakkavor shareholders would also be entitled to a contingent value right (CVR) related to the company’s US business. This CVR would be applicable if the US business is sold for more than 9 times its EBITDA.
Upon completion of the transaction, Greencore shareholders would hold a majority stake of 56% in the combined entity, with Bakkavor shareholders owning the remaining 44%. This merger agreement in principle represents a strategic move for both companies in the food production sector.
The market has taken note of the proposed offer and the potential it holds for both Greencore and Bakkavor, as reflected in the adjusted price target by Deutsche Bank. The deal is set to create a more significant presence in the industry for the merged company.
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