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Food maker Greencore’s takeover of rival Bakkavor could result in a “significant reduction in competition” for the supply of cold supermarket sauces, the competition watchdog has warned.
it came as Competition and Markets Authority (CMA) has completed an early stage investigation into the £1.2 billion deal.
The regulator said it has no competition concerns regarding the operations of most of the companies.
However, the CMA said that unless the companies offered a solution to address its concerns, the deal could face a more intense second round of scrutiny.
The watchdog said in its initial report that the combined group formed by the merger of the two companies would become one of the largest supermarket suppliers of own-label cold sauces.
It said only two rivals, Two Sisters Food Group and Billington Foods, would provide “material” competition, but said they were both “weak”.
Nevertheless, the regulator approved the move in relation to the cold prepared food and own-label salad markets, where it indicated there was sufficient competition.
greencore And Bakkavor said they would work with the CMA to address its concerns and gain approval for the deal.
The companies still expect to close the deal by “early 2026.”
Dalton Phillips, chief executive of Greencore, said: “The CMA process has been constructive and the phase one decision is welcome, confirming our view of the highly complementary nature of our businesses and product portfolios in ‘food for now’ and ‘food for later’.
“I am truly grateful to our partners at Greencore and Bakkavor for successfully getting us to this point and we are now working with CMA and Bakkavor to complete the Bakkavor transaction early next year for the benefit of all our stakeholders.”
Mike Edwards, chief executive of Bakkavor, said: “Today’s positive news from the CMA is an important step forward in this process, providing welcome clarity that means we can collectively work at pace and remain on track to complete the transaction in early 2026.
“Bakkavor is very well positioned and we are excited to join the GreenCore business and unlock all the related benefits we have highlighted for colleagues, customers and shareholders.”
juice moldinvestment director aj bellSaid: “Although the CMA appears to be largely relaxed about the merger between Bakkavor and Greencore, the minor issue raised regarding own-label cold sauces has created uneasiness in the market.
“Given that these operations constitute a small percentage of revenues in any combination, working out an arrangement with the competition authority should not prove too difficult.
“However, this may still slightly advance the timetable for completing the transaction.”
Greencore shares were down 1.6% in early trading on Monday.