Bakkavör Group has paid in total £623.2 million for Geest Plc.

Bakkavör Group has paid in total £623.2 million for Geest Plc. As of today Bakkavör Group has fulfilled all of its obligations in relation to the acquisition and has now fully acquired Geest.

Bakkavör Group is now the largest manufacturer of chilled and fresh prepared foods in the UK with approximately 29% share of the market. The company operates 42 factories in five countries with over 13,000 employees. Most of the Group’s business is in the UK but also in France, Belgium, Spain and South-Africa. Product categories are 17 in total and the Group now manufactures both fresh and chilled prepared products. Fresh prepared salad, fresh pizza and chilled ready meals are among the Group’s main products.  

Organisational change 

In relation to the Group’s acquisition the Board of Directors has agreed changes to the organizational structure of the company. The purpose of these changes is to maximize synergy and economies of scale as well as to utilize in full the knowledge and experience within the combined Group. The most significant change is that now all of the Group’s operations in the UK will be combined under the Geest brand with Gareth Voyle as its Chief Executive Officer.

 Investor information

 The effects of the acquisition on the Group’s operations will be visible in the Group’s next quarterly statement. The main effects are seasonal fluctuations, change in the EBITDA margin and increased profits.  The seasonal fluctuations are due to the fluctuations of sales in salads. Salads now generate the largest proportion of sales for the Group with the greatest demand in the second quarter but lowest in the first.  Seasonal fluctuations are also visible in the Group’s free cash generated from operations for the same reason.   

The Group’s sales will now be split between geographical areas, UK and the rest of Europe.  Approximately 91% of the Group’s sales are generated from the UK and 9% in the rest of Europe. Sales will also be split between product categories.  

Long-term financial goals 

Before the acquisition Bakkavör Group aimed for 18-20% organic and acquisitive growth annually. After the acquisition the Group’s long term goals for growth will depend on its geographical markets.  In the UK the Group aims to achieve growth which is consistent with the overall growth of the chilled convenience food market at any given time.  Acquisitive growth will now mainly be on the mainland of Europe and in Asia with only bolt-on acquisitions in the UK.  Bakkavör Group aims to achieve 20% growth in Europe. In Asia the Group aims to start up operations and explore the opportunities of a rapidly growing consumer market.  Prior to the acquisition the Group’s target EBITDA margin was between 18-20% but now the Group will aim for 12-14%.  The Group’s long-term goals apply to a period of 4-6 years. 

New financial calendar

The Group’s financial calendar will change as shown below for the remainder of the year.  The Group plans to refer back to its traditional financial calendar next year.  

Quarterly results        Date

Q2                                August 25

Q3                                November 17

Q4                                February 28

AGM                              March 24

 Presentation 

A presentation for shareholders and market participants will be held today at Idno, Vonarstræti 3, 101 Reykjavík at 16:30.  Ágúst Gudmundsson Executive Chairman and Lýdur Gudmundsson CEO will present in more detail the effects of the acquisition on the Group.   

For further information please contact:  

Ágúst Gudmundsson Executive Chairman

Tel: +44 20 8728 5015 

Lýdur Gudmundsson CEO

Tel: +44 20 8728 5015