We urged readers to buy chilled prepared-food maker Bakkavor (BAKK) at 150.5p on 13 March 2025 for its cash generation, defensive attributes and positive trading momentum. Shares spotted scope for a further re-rating of the stock given the private label pizza-to-hummus maker continues to rebuild its margins whilst paring debt levels.
WHAT HAS HAPPENED SINCE WE SAID TO BUY?
Bakkavor’s shares surged on news (14 March) the ready meals-to-dessert maker had rejected two takeover offers from rival Greencore (GNC), with the latest 189p per share proposal rebuffed on 10 March on the grounds it ‘significantly undervalued’ Bakkavor and its future prospects.
In our update on 27 March, we urged readers to keep buying Bakkavor on the basis Greencore could be preparing a much-improved offer; we also flagged Bakkavor’s tasty upside potential as a standalone entity mind you. Our hunch proved correct, as the two food producers subsequently announced (2 April) an agreement ‘in principle’ on the terms of a cash and shares offer valuing Bakkavor at 200p per share or £1.2 billion.
WHAT SHOULD INVESTORS DO NOW?
Some investors will be minded to wait for a firm offer and retain exposure to the combined group’s paper, since the planned merger would create a leading UK convenience food business with meaty combined revenues of roughly £4 billion, strengthened commercial ties and the potential to deliver tasty synergies.
But remember, transformational acquisitions can destroy value, and given the increasingly volatile and uncertain market backdrop arising from Donald Trump’s global tariff war, there is a risk that Greencore walks away from a deal that still needs to pass regulatory clearances. As such, more risk-averse readers might elect to sell their shares in the market now and lock in a respectable 20.7% profit on that original entry price. All in all, a nice problem to have.
These articles are provided by Shares magazine which is published by AJ Bell Media, a part of AJ Bell. Shares is not written by AJ Bell.
Shares is provided for your general information and use and is not a personal recommendation to invest. It is not intended to be relied upon by you in making or not making any investment decisions. The investments referred to in these articles will not be suitable for all investors. If in doubt please seek appropriate independent financial advice.
Investors acting on the information in these articles do so at their own risk and AJ Bell Media and its staff do not accept liability for losses suffered by investors as a result of their investment decisions.
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