Greencore has agreed to sell its chilled soups and sauces factory to Compleat Food Group to clear the way for its Bakkavor merger early next year.
Greencore announced plans to sell the Bristol factory earlier this month after the Competition & Markets Authority (CMA) raised concerns over the proposed merger’s impact on competition in own-label sauces.
The factory generated about £47m in the most recent financial year, representing about 1% of the revenues of the combined Greencore and Bakkavor group.
Greencore CEO Dalton Philips said his team was collaborating closely with Bakkavor on integration planning ahead of bringing the businesses together in early 2026 once the factory sale is complete.
For Compleat, the deal will help grow its roster of brands, which already includes The Real Soup Co. The business has bought several new companies this year including The Real Yorkshire Pudding Company and own-label supplier Freshpak.
Greencore made the announcement alongside its annual results where it reported revenues up 7.7% to £1.9bn in the year to 26 September. This was driven by new business wins, volume growth, and inflation.
In its food-to-go business, which includes sandwiches and salads and makes up 69% of the group’s revenue, sales grew 7.4% to £1.3bn. Sandwiches and sushi performed particularly strongly, Greencore said.
In its other convenience categories including chilled soups and sauces, revenue grew 8.3% boosted by a large ready meals contract won last year.
Pre-tax profits rose 29.3% to £79.5m as price hikes and cost cutting offset the inflationary pressures from rising protein costs, National Insurance and minimum wage hikes.
While Greencore is wary of further tax rises in next week’s budget alongside an expected rise in the national living wage, Philips insisted there are still “lots more” opportunities to trim costs.
This includes a broad implementation of automation that could include robots with the dexterity of a human hand introduced within 18 months, Philips told the Grocer.
“This will be a huge advantage of the merger,” he said. “Our size will mean it’s much easier to have those kinds of conversations with say, a leading robotics company in China.”
Greencore’s share price was up over 6% this morning following its announcements. AJ Bell investment director Russ Mould said the company “served up a veritable feast for shareholders.”
”Revenue, profit, cash flow and dividends are all up, while net debt is down. This puts the group in a strong position ahead of gobbling up Bakkavor and going even bigger in the convenience food market.”
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