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Investing.com -- The UK competition watchdog has opened an initial probe into Greencore Group Plc 's (LON:GNC) planned £1.2 billion acquisition of rival Bakkavor Group Plc (LON:BAKK), a deal that would bring together two of the country’s largest convenience and chilled food suppliers.
The Competition and Markets Authority (CMA) said in a notice dated Monday that it had received sufficient information to begin its first-stage investigation.
The statutory “initial period” starts on September 2 and runs until October 27, when the regulator must decide whether to clear the merger or refer it for a phase 2 review.
Under the terms of the deal, Bakkavor shareholders will receive 85 pence in cash and 0.604 Greencore shares for each Bakkavor share, valuing the company at 200 pence per share.
The package equates to about £1.2 billion on a fully diluted basis and includes a final dividend of 4.8 pence per share, with additional compensation possible if Bakkavor’s U.S. unit is sold by mid-2026.
Following completion, Greencore shareholders would own roughly 56% of the combined group, with Bakkavor investors holding about 44%.
The merged business would generate annual revenues of around £4 billion and employ nearly 30,500 people across operations in the UK, U.S. and China.
Greencore, headquartered in Dublin, is the UK’s biggest sandwich maker, supplying supermarkets and foodservice outlets.
It reported £1.8 billion in revenue in 2024 and employs about 13,300 staff. Bakkavor, based in London, produced £2.3 billion in revenue in 2024, with 85% of sales in the UK, and employs about 17,200 people.
The companies argue that the merger will create synergies across manufacturing, procurement and supply chains. Greencore projects annual pre-tax cost savings of at least £80 million by the third year post-completion, with about half realized in year one. The cost to achieve these savings is estimated at £90 million.
Trade unions, however, have warned of potential job losses from site rationalization, although both companies said redundancies are not expected to be material and that consultations would take place if workforce changes occur.
The current offer follows an earlier £1.14 billion bid that Bakkavor’s board rejected in March. The revised terms announced in April increased shareholder value and received board support.
The CMA’s review will determine whether the merger risks reducing competition in the UK grocery supply chain, where both company’s are leading suppliers of ready meals, salads, bakery items and food-to-go products.