Greencore agrees with CMA to sell Bakkavor sauce and soup business

(Sharecast News) - Greencore Group has agreed to legally binding undertakings with the UK Competition and Markets Authority to secure clearance for its proposed acquisition of Bakkavor Group, avoiding a full phase two merger investigation. The CMA said it would otherwise have been required to refer the deal for an in-depth review due to concerns that the transaction could substantially lessen competition.

Under the undertakings, Greencore agreed to divest Bakkavor's own-label chilled sauces and chilled soups business in Bristol as a going concern.

The divestment must be completed within one month of the undertakings taking effect, or within two weeks of completion of the acquisition, whichever happens first.

That business includes the manufacturing facility, employees, customer contracts, recipes and associated assets, with the undertaking intended to preserve effective competition in the supply of own-label chilled sauces in the UK.

Greencore said it had already entered into a binding agreement to sell the business to the Compleat Food Group, subject only to formal CMA approval of the purchaser and the undertakings.

The CMA would need to be satisfied that the buyer was independent of Greencore, had the financial resources and operational capability to run the business on a long-term basis, and that the sale would not create new competition concerns.

Pending completion of the divestment, Greencore was required to keep the divested business fully separate from its existing operations, maintain its competitive position and prevent any loss of value.

That includes restrictions on management changes, asset disposals, staff transfers and the sharing of confidential information, alongside an obligation to keep the CMA informed of any material developments.

The undertakings also imposed long-term separation measures.

For 10 years following the divestment, Greencore and its group companies will be prohibited from reacquiring an interest in the divested business, influencing its management or strategy, or appointing staff to senior roles within it, without prior CMA consent.

At 0847 GMT, shares in Greencore Group were up 1.41% at 252.5p, while those in Bakkavor Group were ahead 0.21% at 235p.

Reporting by Josh White for Sharecast.com.