LONDON: Bakkavor Group plc, a leading international provider of fresh prepared food, has entered into a binding agreement to sell its China operations, with the sale of the entire issued share capital of Bakkavor China Holdings Limited (“BCHL”) to Lihe Xing (Qingdao) Food Technology Co. Ltd., wholly owned by Lihoo’s (Qingdao) Food Industry Company Limited (“Lihoo’s”), a company headquartered in China.
Bakkavor’s business in China is as a leading manufacturer of fresh prepared food, supplying foodservice and retail customers nationally with salads, sandwiches and meals from 7 manufacturing sites with c.2,300 colleagues. In FY24, the business generated revenue of £105m.
Over the last two years, Bakkavor has made significant progress in simplifying its operations in China and, as part of its previously stated review of its strategic options, this sale completes the Group’s exit from the region.
The cash consideration is RMB c.500m (c.£50m) on a cash and debt-free basis and is expected to complete in the second half of 2025, subject to regulatory approval. At 28 December 2024, the carrying value of net assets was £39m with a net profit on disposal expected to be c.£15m, subject to completion adjustments.
Transaction proceeds will be used to further reduce the Group’s leverage and the exit from China, historically dilutive to Group adjusted operating profit margin, will support the delivery of the Group’s medium-term margin target of 6%.
Mike Edwards, CEO, commented: “Over the last 20 years, we have built a great business in China and I would like to thank all our China colleagues for their contribution to the significant progress we have made in recent years. With strong foundations in place, we are confident that going forward the business and its stakeholders will benefit from Lihoo’s local expertise and experience as a frozen and fresh meal manufacturer.
We remain focussed on delivering the great service our customers are accustomed to whilst we work towards completion.”