Unions express concern over staff cuts and competition following £1.2bn deal
The takeover of Bakkavor by Greencore moved a step closer after the boards of the two companies agreed terms.
The transaction, valued at £1.2bn, would create a UK convenience food business with a combined revenue of around £4bn and comprising 30,500 employees.
“Greencore and Bakkavor have highly complementary product portfolios and a combination of their businesses creates a leading, homegrown UK manufacturing business with a diverse product offering and strong commercial relationships, operating in attractive segments across the UK convenience food landscape,” the two businesses said in a joint statement to shareholders.
“The boards of Greencore and Bakkavor believe that a combination will drive significant benefits for customers and colleagues of both companies and will make a significant continuing contribution to the UK economy.
“The transaction offers value to Bakkavor shareholders in the form of up-front cash returns, while shareholders of both Greencore and Bakkavor will benefit from the anticipated value creation potential of the larger and more diversified combined group with an enhanced capital markets profile and greater trading liquidity.”
Conclusion of the transaction would see Greencore shareholders owning approximately 56 per cent of the combined group, and Bakkavor shareholders 44 per cent.
Greencore chair Leslie Van de Walle said: “Greencore is a great business that continues to deliver for customers, consumers and shareholders. The strength of our performance has provided the platform to pursue a transformative growth opportunity in the proposed acquisition of Bakkavor.
“We have long admired Bakkavor and we are pleased to announce a transaction that will create a true UK leader in convenience food. We intend to bring together our strong and complementary companies to deliver high-quality, innovative food to UK customers and consumers.”
Unions express concern
News of the deal has, however, raised concern among trade unions, who noted that the announcement references the fact that “approximately five per cent of the total annual run-rate pre-tax cost synergies are expected to be generated through the rationalisation of manufacturing sites and associated headcount currently operated by Greencore and/or Bakkavor.”
The GMB union said it feared the terminology is management speak for cost cutting. “The likelihood of site closures and drop in headcount confirms our worst fears – that hard-working production staff will be facing job losses,” said Eamon O’Hearn, GMB national officer.
“It is disappointing that references to job losses and site closures was buried deep in the appendices of the announcement, and was not mentioned in emails to unions this morning. This is no way to treat loyal staff, many of whom worked throughout Covid to keep food production going.
“Any review initiated by Greencore needs to be transparent and include their workers’ trade union voice.”
Unite national officer for food Bev Clarkson said the union also has serious concerns about the deal, and pointed out that less competition in the marketplace is likely to lead to long-term wage stagnation and potential redundancies.
“It is also bad news for consumers as, at a time when prices are already rising, fewer competitors in the market will likely lead to faster price rises,” she said. “Unite is calling for an urgent meeting with both companies’ management teams to address these issues and we will be supporting our members throughout this process.”
