Greencore Group PLC (LSE:GNC) and Bakkavor Group PLC (LSE:BAKK) remain confident that their planned £1.2 billion merger will complete early next year, despite the UK competition regulator warning that the deal could reduce competition in the chilled sauces market.
The Competition and Markets Authority (CMA) said its initial phase one review found that the takeover could result in a “substantial lessening of competition” for supermarket own-label sauces.
It said only Two Sisters Food Group and Billington Foods would remain as significant competitors, both seen as “weaker” rivals.
While the regulator cleared the transaction in relation to chilled ready meals and own-label salads, it said the deal could be referred for a more detailed phase two investigation unless remedies are proposed.
Greencore chief executive Dalton Philips said the CMA’s findings were “constructive” and supported the companies’ view that their product portfolios are “highly complementary.”
Bakkavor boss Mike Edwards described the outcome as “a significant step forward,” adding that both businesses will continue working closely with the CMA to finalise the merger.