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Two brothers dubbed the “business Vikings” are in line for a £250m payday after selling their ready-meal business to Irish sandwich-maker Greencore.
The Gudmundsson brothers, who founded Bakkavor in 1986, are cashing in after striking a £1.2bn deal with Greencore, which will create a new food-to-go giant worth £4bn.
Under the terms of the deal, Lýdur and Ágúst Gudmundsson will receive 177m shares in the new group alongside their £250m cash payout.
The news of the deal comes after months of speculation over a merger between the two London-listed companies.
Bakkavor previously rejected two approaches from Greencore, with the board claiming last month that an earlier £1.14bn offer had “significantly undervalued” the business.
Together, the food manufacturers produce sushi, ready meals, sandwiches, dips, hummus and salads for Britain’s biggest supermarkets, including M&S, Sainsbury’s and Tesco.
It will, however, come as a significant turning point for Bakkavor, which only joined the London Stock Exchange in 2017.
The listing had been seen as a crucial moment for the Gudmundsson siblings, who had set the company up as a business processing and exporting cod roe.
They had previously borrowed from banks to fund Bakkavor’s expansion but came unstuck when the financial crisis hit Iceland’s banking system in 2008.
The pair had been forced to cede control of Bakkavor in 2010 in a debt-for-equity swap before taking it back in 2016 in a tie-up with US hedge fund Baupost.
Despite the London float, the brothers remained the largest shareholders in Bakkavor with a 50pc stake.
They were previously in charge of Bakkavor’s day-to-day operations between 1986 and 2022 and have since retained seats on the board as non-executive directors.
They are also expected to join the board of the new combined business.
Concern over potential job losses
The tie-up is expected to ease pressure on Greencore, which has recently been targeted by activist investor Oasis Management over boosting shareholder returns and speeding up a turnaround plan.
Greencore said together with Bakkavor, it could free up more cash to invest in growth by looking at combining their distribution and buying teams.
However, union chiefs at GMB raised concerns over potential job losses.
Eamon O’Hearn, GMB national officer, said “Companies ‘assessing synergies’ is often management speak for cost cutting. It is widely acknowledged by the Government and the wider industry, that the UK food and drink industry needs more capacity not less.
He added: “The GMB is calling for a commitment to no factory closures and no job losses.”