Greencore acquires rival Bakkavor in €1.4bn deal

Greencore said its half-year profit before tax surged by 81.6% to £26.7m compared to last year

Chief Executive of Greencore, Dalton Philips said the business had got off to a slower start to the year than envisaged

Convenience food manufacturer Greencore posted a significant rise in profits for the six months ending in March and announced its acquisition of rival Bakkavor Group.

Valued at £1.2bn (€1.42bn), Greencore said the deal already had strong support from a number of both Greencore and Bakkavor shareholders.

It said the deal with Bakkavor would create a leading UK convenience food business with a combined revenue of £4bn and approximately 30,500 employees.

Bakkavor's retail customers include Tesco, M&S and Waitrose, while Greencore supplies all major UK supermarkets.

The food company said its half-year profit before tax surged by 81.6% to £26.7m compared to last year, thanks to "disciplined cost management through operational and commercial excellence initiatives and continued growth with customers." Its half-year revenues rose 6.5% to £922m.

The company said it continued to focus on product innovation, with 270 new products launched during the first half of its financial year.

It also noted new business wins across the food-to-go and ambient grocery sectors, which are expected to be onboarded by the end of the year.

Dalton Philips, Greencore's CEO, said the company made excellent progress in the first half of the financial year.

"By continuing to strengthen our core business, we've accelerated our financial performance - enhancing returns, improving margins and driving growth ahead of the market. We have built strong momentum and remain committed to continued delivery," he said.

"Our strong first half performance was enabled by continued growth with customers, innovative new products and disciplined cost management, including through operational excellence and automation," the CEO said.

"While we are mindful of a challenging market environment, and with our seasonally stronger second half still ahead of us, we now expect adjusted operating profit for FY25 to be ahead of previous guidance, in the range of £114-117m," he added.

Strong demand for pre-packaged convenience food has boosted Greencore's growth in recent years, however, increased payroll and employment costs have proven to be an overhang for the Ireland-based company.

Headquartered in Dublin, the group supplies nearly 750 million food-to-go items each year and employs about 13,300 staff.

Speaking on the acquisition of Bakkavor, Mr Philips added: "Bakkavor is the ideal partner for Greencore and we look forward to delivering on the significant growth potential of the enlarged business," he added.

Mike Edwards, the chief executive of Bakkavor, said that combining with Greencore would bring together two businesses with the best people in the industry allowing us to take a "best of both approach" to drive performance on every level.

"The combined business will create more opportunities for colleagues, allow us to do an even better job for customers, and be even more resilient," he said.

"I am confident that the relentless focus that both businesses have on quality, service and innovation, and on striving to be a great place to work, will remain at the heart of the bigger business."