Greencore Group PLC (LSE:GNC) and Bakkavor Group PLC (LSE:BAKK) have agreed a merger to create a £4 billion convenience food group.
The two FTSE 250 company said they had struck a deal structured as a possible offer by Greencore for Bakkavor.
Bakkavor shareholders would receive 85p in cash and 0.604 Greencore shares per share, under the offer, as well as retaining the right to a final dividend of 4.8p.
This creates an implied value per Bakkavor share of 200p, excluding the final dividend, representing a 32.5% premium to the share price on 13 March and 39.8% to the three-month average price, and values Bakkavor at approximately £1.2 billion.
Following the deal, Greencore shareholders would hold around 56% of the combined group, and Bakkavor shareholders would hold 44%.
The transaction includes a contingent value right for Bakkavor shareholders linked to a potential sale of Bakkavor’s US business, with additional value would payable if the sale occurs before 30 June 2026 or completes within 12 months of the offer.
Bakkavor's Agust Gudmundsson and Lydur Gudmundsson would join the combined group’s board as non-executive directors.
The boards of the two companies "see compelling strategic, commercial and financial rationale" for the deal and believe it provides "a highly compelling value creation opportunity for stakeholders in both Bakkavor and Greencore".