Investing.com -- Greencore Group (LON:GNC) announced on Thursday that it has agreed to acquire U.K. fresh food producer Bakkavor Group PLC (LON:BAKK) in a deal valued at £1.2 billion ($1.59 billion). The deal was announced alongside both companies’ latest earnings reports, in which each raised its full-year outlook.
Greencore shares gained 2.3% after the announcements as of 08:28 GMT, while Bakakvor rose around 2%.
The deal, which includes both cash and shares, will see Bakkavor shareholders receive 85 pence in cash and 0.604 new Greencore shares per Bakkavor share, valuing each share at 200 pence. Additional value could be unlocked if Bakkavor’s U.S. business is sold.
Greencore said it has already secured binding agreements from shareholders representing around 69.4% of Bakkavor’s stock.
Following completion, Greencore shareholders will own roughly 56% of the combined group, with Bakkavor shareholders holding the remaining 44%.
Separately, Greencore raised its full-year guidance for fiscal 2026 after a strong first-half performance. The group now expects adjusted operating profit between £114 million and £117 million, up from previous guidance of £112 million to £115 million. This would bring earnings back to pre-pandemic levels.
"This is a positive update for BAKK with a 4% uplift on F2025 adjusted operating profit guidance," RBC Capital Markets analyst Tania Maciver said in a note.
First-half adjusted operating profit rose 60% to £45.2 million, while pretax profit climbed to £26.7 million from £14.7 million. Revenue was up 6.5% year-on-year to £922 million.
Bakkavor also lifted its full-year profit forecast, citing improved inflation trends and ongoing efficiency gains. The company now sees adjusted operating profit between £120 million and £126 million, ahead of the previous range aligned with consensus forecasts of £114 million to £123.1 million.
Similar to her Greencore comments, Maciver said Bakkavor’s outlook lift is "positive news, driven by underlying market volume growth ahead of the underlying grocery market, but also includes new business wins and continued delivery on efficiency improvements."
Bakkavor reported a 3.3% rise in revenue to £559.3 million, with like-for-like sales up 3.9%, supported by volume growth in international markets. It reaffirmed its target to achieve a 6% operating margin by 2027.