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Greencore’s £1.2bn deal to buy Bakkavor is under the spotlight after the competition watchdog said the tie-up between Britain’s biggest sandwich maker and its rival could harm competition.
Greencore struck a deal in April to buy its rival Bakkavor, which supplies sandwiches, salads and other snacks to leading supermarkets such as Tesco, Marks & Spencer, Sainsbury’s, Waitrose and Asda.
Together the companies said they would create a UK convenience food business with a combined revenue of £4bn.
However, the Competition and Markets Authority (CMA) has said the deal could result in a “substantial lessening of competition” within the market for supermarket own-label chilled sauces.
The watchdog, which has now completed its phase 1 investigation into the deal, told the companies that they have until 3 November to address its competition concerns. If the regulator is still unsatisfied, it will start the next phase of its investigation.
However, Greencore and Bakkavor welcomed the decision, saying the regulator did not raise any competition concerns about 99% of the revenues of the combined group. The CMA in its ruling did not find a risk of market dominance in Italian chilled ready meals and own-label salads, leaving chilled sauces as the only area of concern.
Dalton Philips, the chief executive of Greencore, said the CMA process had been “constructive” and that its phase 1 decision “is a welcome one”.
“I am really grateful to my colleagues at Greencore and Bakkavor in successfully getting us to this point and we are now working with the CMA and Bakkavor for the benefit of all our stakeholders to complete the Bakkavor transaction early next year,” he said.
Mike Edwards, the chief executive of Bakkavor, added the CMA’s decision provided “welcome clarity which means we can collectively work at pace and stay on track to complete the transaction in early 2026”.
Analysts at the broker RBC Capital Markets said chilled sauces represent just 1% of the two companies’ combined revenues, as both manufacturers supply pasta sauces to large retailers in the UK.
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Shares in Greencore, which is headquartered in Dublin but listed on the London Stock Exchange, fell by about 2% in early trading on Monday. The group employs about 13,300 staff and has 14 factories across the UK.
Bakkavor was founded by the Icelandic brothers Lýdur and Ágúst Gudmundsson – a pair of “business Vikings” known as “the Bakka brothers” – who between them served as the chief executive of the business from 1986 until 2022.
The group is now headquartered in London and employs about 14,900 people, with more than 30 sites across the UK and the US.
