Bakkavor PLC on Friday said it has granted suitor Greencore PLC an extension to the deadline for it to make a firm takeover offer, as the convenience food making peers discuss a possible £1.2 billion bid.

Greencore has to announce its intention to make an offer or walk away - the so-call ’put-up-or-shut-up’ deadline - by end of business on May 9, pushed back from Friday.

Bakkavor said the deadline extension is to allow time to continue discussions with Greencore, including completing due diligence.

London-based Bakkavor is a manufacturer of prepared food, with retail customers including Tesco PLC and Marks & Spencer Group PLC, while Greencore is a Dublin-based manufacturer of convenience foods.

Last week, Bakkavor and Greencore said they had reached a preliminary understanding on the essential financial conditions of a potential cash and share offer by Greencore for Bakkavor.

Under the terms of the possible offer, Greencore would pay 85 pence in cash and 0.604 of a Greencore share per Bakkavor share.

Bakkavor shares were down 0.2% to 173.78 pence in London on Friday morning. Greencore shares were flat at 169.20p. Bakkavor’s market capitalisation, at £1.01 billion, is larger than its suitor’s. Greencore’s market cap is £747.2 million.

In addition under the potential offer, Bakkavor shareholders will retain the right to a final dividend of 4.8p per share. Exclusive of the final dividend, it implies a value of 200p per share in Bakkavor, and valuing all of Bakkavor’s shares around £1.2 billion.

Despite Bakkavor’s larger size, due to the cash component of the deal, Greencore shareholders would own 56% of the enlarged company and Bakkavor shareholders 44%.

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