Greencore and Bakkavor must address concerns from the Competition & Markets Authority (CMA) in the own-label chilled sauces category to avoid an in-depth investigation of the £1.2bn merger of the two food groups.
The monopoly watchdog found the acquisition of Bakkavor by Greencore would lead to a “realistic prospect of a substantial lessening of competition” in the supply of own-label chilled sauces in the UK.
The CMA said this morning, after concluding a phase one probe into the deal, that the companies now have until 3 November to offer undertakings to remedy its competition concerns. The merger will be referred for a phase two inquiry if the regulator is unsatisfied.
During the phase one review, the CMA examined potential competition worries in own-label chilled sauces, Italian chilled ready meals and salads.
The CMA spoke to, and gathered evidence from, grocery retailers and rivals of the two companies. In particular, the CMA obtained information from grocers regarding recent tender processes for own-label chilled sauces, chilled ready meals and salads.
“The evidence indicates the merged entity will be one of the largest suppliers of chilled sauces and that the only two other competitors that exert some material constraint on the parties, 2 Sisters Food Group and Billington Foods, are weaker competitors,” the CMA said in the summary for its phase one decision. “Other competitors provide only a very weak constraint on the parties.”
Greencore and Bakkavor welcomed the findings that there were no competition concerns in relation to 99% of the revenues of the combined group.
A statement this morning on the London Stock Exchange added the two businesses would continue to “work constructively with the CMA to bring these matters to a conclusion”.
What would a mega-merger mean for Bakkavor and Greencore - and the own label manufacturing market?
Greencore CEO Dalton Philips said: “The CMA process has been constructive, and the phase one decision is a welcome one, confirming our view of the highly complementary nature of our businesses and product portfolios across ‘food for now’ and ‘food for later’.
“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. I’m genuinely excited about what 2026 has in store as we bring these two great businesses together to create a true UK national food champion to deliver high-quality, innovative food to customers and consumers.”
Bakkavor CEO Mike Edwards added: “Today’s positive news from the CMA is a significant step forward in the process, providing welcome clarity which means we can collectively work at pace and stay on track to complete the transaction in early 2026.
“Bakkavor is in great shape and we remain excited about joining the Greencore business and unlocking all the associated benefits we have highlighted for colleagues, customers and shareholders. I would like to thank everyone in Bakkavor and Greencore who has worked so hard in getting us to this advanced stage in the process.”
The merger will create a convenience foods giant with a combined turnover of about £4bn.
No comments yet