Shares of Bakkavor Group Plc (BAKK.L) were gaining around 7% in the morning trading on the London Stock Exchange after the firm on Wednesday agreed to be acquired by Irish food company Greencore Group Plc (GNC.L) in a revised 1.2 billion pounds cash and share deal.
Under the terms of the revised offer, Bakkavor Group shareholders will receive 85 pence in cash per Bakkavor share, and 0.604 Greencore shares for each Bakkavor share held, implying a value of 200 pence per Bakkavor share. Bakkavor Group earlier had rejected two takeover proposals by Greencore Group.
The per share price represents a premium of approximately 32.5 percent to Bakkavor's undisturbed closing share price of 151 pence per share on March 13, being the day prior to the commencement of the offer period. Bakkavor shareholders would also remain entitled to receive the fiscal 2024 final dividend of 4.8 pence declared on March 4, payable on May 28, subject to shareholder approval at Bakkavor's AGM on May 22.
In addition, Bakkavor shareholders will receive a contingent value right in case of a disposal of Bakkavor's US business.
Following the transaction, which is intended to be implemented by means of a scheme of arrangement, Greencore shareholders would hold around 56 percent of the combined group, while Bakkavor shareholders would own around 44 percent.
Additionally, it is proposed that Agust Gudmundsson and Lydur Gudmundsson, who are currently non-executive directors at Bakkavor, will join the board of the combined group as non-executive directors once the transaction is completed. The latest cash and share deal is expected to create a British convenience food business with a combined revenue of 4 billion pounds.
Greencore Group said that the combined UK convenience food business will offer a diverse product range, strong commercial relationships, and competitive capabilities across key UK food segments. The merger would deliver significant benefits for customers, consumers, and the UK economy, the company added.
On the LSE, BAKK.L is currently trading up 6.75 percent at GBP 189.85, while GNC.L is down 0.34 percent at 178.00 pence.
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