Greencore’s acquisition of Bakkavor faces competition concerns
The competition watchdog has warned that food manufacturer Greencore’s acquisition of competitor Bakkavor could lead to the “substantial lessening of competition” for the provision of chilled supermarket sauces, reports BritPanorama.
This announcement follows the Competition and Markets Authority (CMA) completing an initial phase one examination of the £1.2bn deal. The CMA first indicated plans to scrutinise the transaction between the two food giants in July this year.
Greencore, headquartered in Dublin, and London-based Bakkavor operate multiple sites across the UK including areas in Somerset, Wiltshire, West Midlands, Cheshire, and Lancashire.
In its latest statement, the CMA noted it found no competition concerns regarding the vast majority of the firms’ operations.
However, the deal may face a more in-depth phase two investigation unless both companies provide a remedy to address the CMA’s concerns.
The merger would form one of the largest suppliers of own-brand chilled sauces, as evidenced by the CMA’s preliminary findings.
The watchdog noted that only two competitors, Two Sisters Food Group and Billington Foods, would pose “material” competition, yet both are described as “weaker”.
Despite these issues, the CMA has approved the merger concerning chilled ready meals and own-brand salads, where adequate competition appears to exist.
Both Greencore and Bakkavor have confirmed their intention to work with the CMA to resolve the concerns and secure clearance for the deal.
They remain hopeful to finalise the acquisition by “early 2026”.
Dalton Philips, Chief Executive of Greencore, remarked, “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,” he added.
Mike Edwards, Chief Executive of Bakkavor, expressed optimism regarding the CMA’s announcement: “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.”
Russ Mould, investment director at AJ Bell, noted the CMA’s general ease with the merger, yet acknowledged the concerns regarding own-label chilled sauces: “While the CMA seems to be largely relaxed about the merger between Bakkavor and Greencore, the slight issue flagged about own label chilled sauces has caused a touch of market disquiet.”
“Given these operations account for a slim percentage of revenues across any combination, coming to an arrangement with the competition authority should not prove too difficult. However, it could still push the timetable for completing the transaction out a little.”
Shares in Greencore fell by 1.6% in early trading on Monday.
This situation exemplifies the delicate balance regulators maintain in ensuring competition while allowing market consolidation. While the CMA has highlighted specific concerns, the overall landscape remains mostly unaffected, spotlighting the complex interplay between business strategy and regulatory oversight.
