Bakkavor Group plc (BAKK.L), on Tuesday, announced a binding agreement to sell the entire issued share capital of Bakkavor China Holdings Limited to Lihe Xing (Qingdao) Food Technology Co. Ltd., a subsidiary of Lihoo's (Qingdao) Food Industry Co. Ltd., headquartered in China.
Over the past two years, Bakkavor has focused on streamlining its operations in China, and this sale completes its planned exit from the region. The transaction, valued at about RMB 500 million or £50 million on a cash and debt-free basis, is expected to be finalized in the second half of 2025, pending regulatory approval.
As of 28 December 2024, the carrying value of net assets stood at £39 million, with an anticipated net profit on disposal of around £15 million, subject to completion adjustments.
The company has planned to use the proceeds from the sale to reduce its leverage, and the exit from China, previously a drag on adjusted operating profit margins, will support Bakkavor's medium-term margin target of 6%.
Bakkavor has been a key player in China's fresh prepared food market, supplying foodservice and retail customers with salads, sandwiches, and meals from seven manufacturing sites, employing about 2,300 colleagues. In FY24, the business generated revenue of £105 million.
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