Geest and Bakkavor seal deal

Icelandic prepared foods specialist Bakkavor has agreed to buy Geest for £485 million cash.

Bakkavor’s business is already focused on the UK and this acquisition follows a preliminary proposal from the company for Geest reported by freshinfo in December 2004.

Sales for the combined force are expected to top £1 billion in the UK putting the group in the same league as Northern Foods, the market leader in the ready-meal and convenience food market.

Geest has been finding the going tough and said today as it announced preliminary full-year results for the 12 months to January 1, that the food retail sector remains challenging. It also announced a nine per cent drop in underlying profit.

“The food-retailing market has changed dramatically in the last two years,” said Geest ceo Gareth Voyle. “And while Geest is well positioned, there is no doubt that price competition will continue to dominate the day-to-day grocery trade.”

The new combined Bakkavor-Geest group is likely to look to continental Europe for expansion. “Our preferred method is to acquire small and grow it,” said Geest finance director Mark Pullen.

Bakkavor has two subsidiaries in the UK and its core business is ready meals and dips. It has production sites in Birmingham and London. No redundancies are expected as many of the two companies’ product lines are complementary: Geest is strong in guacamole and salsa, for example, whereas Bakkavor has a strong tzatziki and taramasalata business.