‘Business Vikings’ in line for payday as deal agreed to create £4bn UK food giant

Two Icelandic brothers, described as “business Vikings”, are in line to make millions after their ready meals company, Bakkavor, agreed a takeover deal with the competitor Greencore, in a move set to create a £4bn food-to-go giant.

Greencore, the UK’s largest sandwich maker, said it had agreed to buy its rival Bakkavor in a deal valuing the company at £1.2bn.

Two of its earlier bids for the company had been rejected because Bakkavor considered they undervalued the business.

Greencore, which specialises in prepared food, employs about 13,300 staff and has 14 factories across the UK that make products including sushi and chilled ready meals for all the big UK supermarkets.

Bakkavor makes 85% of its revenues in Britain manufacturing products for the major supermarkets, including Tesco, Marks & Spencer, Sainsbury’s, Waitrose and Asda. It makes products including dips and hummus for Tesco and high-protein salads and “Gastropub” ready meals for Marks & Spencer.

Together, the companies said they would create a UK convenience food business with a combined revenue of £4bn, offering a diverse range of products.

Bakkavor was founded by the brothers Lýdur and Ágúst Gudmundsson – a pair of “business Vikings” known as “the Bakka brothers” – who between them served as the chief executive of the business from 1986 until 2022.

The phrase “business Viking” was used to describe the Icelandic financiers who gained recognition for their string of purchases of European businesses, often funded by debt. The country’s economy later became an emblem of the 2008 global financial meltdown.

The brothers still sit on the company’s board as non-independent non-executive directors, and together own just over half of the company.

Under the terms of the cash and share deal, Bakkavor shareholders would receive 85p in cash for each share, as well as 0.6 Greencore shares, putting the Gudmundsson brothers in line for a large payday.

The pair are expected to join the board of the combined group as non-executive directors.

Greencore’s offer represents a premium of 32.5% to Bakkavor’s closing share price on 13 March, the day before the start of the offer period. Greencore shareholders would own approximately 56% of the combined group, with Bakkavor’s investors owning the remaining 44%.

The deal will still require the approval of Bakkavor’s shareholders at their annual meeting in May.

Bakkavor went ahead with its float on the London Stock Exchange in 2017, only days after shelving plans to list as a result of market volatility.

Lýdur Gudmundsson was found guilty of financial crime in Iceland in connection with investment in the failed Icelandic bank Kaupthing during the country’s 2008 financial crisis.