Bakkavor's retail customers include Tesco, M&S and Waitrose, while Greencore supplies its products to all major UK supermarkets.
“We are encouraged that a path forward has been found in a relatively short time frame and increasingly lean towards the value of the Greencore/Bakkavor combination,” Jefferies analysts said in a note.
Under the terms of the deal, Bakkavor shareholders will receive 85 pence in cash and 0.604 Greencore shares per Bakkavor share.
High demand for pre-packaged semi-finished products has driven Greencore's growth in recent years, but rising wage and labor costs have proven to be a drag on the Irish company.
The company is restructuring its business in the US after overspending and a downturn in the consumer market led to reduced volumes in the region.
The latest proposal will be unanimously approved by the companies and will allow Bakkavor founders Agust Gudmundsson and Lidur Gudmundsson to join the board of directors of the combined group as non-executive directors.
Source: Reuters
