British convenience food manufacturer Greencore said Bakkavor had rejected two of its bids for a potential acquisition, the latest of which would have valued the rival at £1.14 billion (€1.35 billion).
Bakkavor said the offer significantly undervalued it.
Shares of Bakkavor jumped more than 18% to 179.5 pence, their highest in nearly six and a half years, while Greencore fell about 1%.
Bakkavor's stock was still under the implied value of 189 pence per share from the cash-and-stock proposal that also included a dividend right.
Greencore, which operates in the UK and Ireland, has benefited from resilient demand for its pre-packaged sandwiches, chilled soups, and prepared meals, but it faces higher labour costs after the British government raised contributions from employers.
Greencore said its last proposal, made on 7 March, provided a 'highly compelling value creation opportunity' for both companies, with bigger scale and cashflows if merged, adding that it was evaluating "all strategic opportunities".
Bakkavor, which operates in Britain, China and the United States, reported 4% revenue growth for 2024.
Under the latest proposal, Greencore shareholders would own about 59.8% of the bigger group and Bakkavor investors would own the rest.
Greencore
In January of this year, the convenience food group reported a 7.5% increase in first-quarter revenue, to £474.3 million (€567.24 million), boosted by an increase in volumes and mix, and the positive impact of inflation recovery and pricing.
On a like-for-like basis, the company’s revenue grew by 4.9% during the quarter, while total volumes increased by 2.6%, compared to a year ago.
Elsewhere, prepared food firm Bakkavor Group plans to mitigate the impact of changes to National Insurance in the UK budget, effective April 2025, through price recovery and efficiency improvements.
According to Bakkavor's estimates, it will cost the company around £15 million (€17.8 million) annually.
